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

C.F.M. Files: Lot M–88: Box 2080: CFM Minutes

United States Delegation Minutes, Council of Foreign Ministers, Third Session, Fifteenth Meeting, Waldorf-Astoria Hotel, New York, December 4, 1946, 4 p.m.⁵⁵

New York, December 4, 1946, 4 p.m.

secret
USDEL(CFM) (46) (NY) 15th Meeting

Record of Decisions of First to Ninth Meetings

The Ministers approved these records.

Report of Deputies⁵⁶

Mr. Jebb: The Deputies approved a new draft of Article 76 of the Italian Treaty with the exception of one word.⁵⁷ The Soviet Delegate suggested that the same procedure should be followed as on the article concerning the settlement of economic disputes. He believed that the Commission should be called a “conciliation commission”. The other delegates did not believe that there was an exact parallel but they were prepared to call the commission simply “commission” and not an “arbitration” commission. The Deputies then examined the instrument for the provisional regime of Trieste. Three Deputies could not accept the last sentence proposed by the Soviet Delegate to Article 10 because they believed that confusion would arise between current negotiations and regular laws and regulations. With respect to Article 6, a new text has been approved by the Military Experts. With respect to Article 9, the Deputies could not consider this matter until they received a report from the Trieste Commission. The Chairman of this Commission had reported briefly this morning that the Commission had not arrived at any definite figure for the deficit of the Free Territory. The Soviet Representative on the Commission made no comment. The other representatives believed that the figure, based on U.K. estimates, would be about $10 to $20 million. The Commission will interview two representatives of the Budgetary Commission of the United Nations this afternoon and would like guidance on the following point: Should the Commission suggest to the Secretariat that immediate approach be made to UNO regarding the salary of the Governor (in the neighborhood of $50 to $100 thousand) or should it indicate that it was a question of a much larger amount—in the neighborhood of $10 to $20 million.

Article 76

M. Molotov withdrew the Soviet proposal to call the Commission a Conciliation Commission. The redraft as submitted by the Deputies was thereby adopted.

Article 10 (Annex to Article 16-bis)⁵⁸

M. Molotov: I propose that the last sentence be re-worded to read: “Regulations on current operational matters—.”

Mr. Bevin: What does this mean?

M. Molotov: There are always current decrees on administrative matters which are different from the regular laws and regulations. I propose the word “operational” to avoid too broad an interpretation.

Mr. Byrnes: The first sentence of this article states that existing laws and regulations remain valid unless and until revoked or suspended by the Governor. We spent a great deal of time discussing this matter yesterday. This first sentence includes all current regulations. To insert M. Molotov’s language would mean the insertion of an absolutely conflicting statement. It would be impossible to accept it. M. Molotov is undoing what we agreed to yesterday.

M. Molotov: This is not a new proposal. I made it yesterday and no-one objected to it. Can you imagine that the Council of Government would not be qualified to issue instructions regarding street cleaning, housing, public health, etc? Does it have to reach agreement with the Governor on all these matters? This is simply a question of current operational matters.

Mr. Byrnes: We reached agreement yesterday on the question of the introduction of new laws and regulations. During the short period of the provisional government there will not be many changes in existing laws or new regulations. Even if there should be some changes the Governor will always wish to discuss them with the Council.

Mr. Bevin: There were many suggestions made yesterday. In my view Article 10, without the last sentence, is what we agreed to.

M. Molotov: Cannot the Council issue instructions regarding traffic, housing, etc? I do not see how the government will operate unless the Council is charged with these functions.

Mr. Bevin: But these are purely administrative matters. Article 10 refers to laws and regulations.

M. Molotov: If we have in mind that such administrative matters will be taken care of without mentioning them in Article 101 will not insist upon the inclusion of this sentence.

The Ministers approved Article 10 without the inclusion of the last sentence.

Funds for the Free Territory⁵⁹

M. Molotov: Shall we await the reports of the Trieste Commission?

Mr. Bevin: The Commission needs guidance on its approach to the United Nations. Will it ask for $100,000 or will it indicate that a much larger sum will be needed at a later date?

M. Molotov: The Soviet Delegation has grave doubts on this matter. We do not know what arguments may be advanced in support of the $10 to $20 million. We Russians say that money likes to be counted. There is no justification for considering this question at this time. The Soviet Delegation will refrain from expressing its point of view until the Trieste Commission has studied the question.

Mr. Bevin: Could we not ask UNO for $100,000 for the Governor and at the same time request UNO to study the financial situation in the Free Territory and to make a report thereon. This might be done by the Social and Economic Council. It would probably be impossible to do this during the present session of the General Assembly. I therefore suggest that the Four Powers make an advance to the Free Territory and that this advance be paid back at a later date by UNO.

M. Molotov: We have no doubt that this question can be resolved quickly and that the correct amount can be worked out. But we do not know for what reasons the $10 to $20 million are needed. We cannot discuss the budget or the deficit until we know for what purposes the money will be put.

Mr. Bevin: That is precisely why I suggested that UNO study this question.

M. Molotov: It is too early to send a UNO Commission to the area.

We do not yet know for what purpose this amount is needed. We have doubts that any money will be needed at all. It would be better to have our experts look into this matter.

Mr. Bevin: What instructions shall be given to the Commission which is meeting the UNO representatives this evening?

M. Molotov: We could instruct them to discuss what funds would be necessary to maintain the administrative functions of the Governor and his salary.

M. Couve de Murville: There is no question regarding the first point, i.e., that UNO should bear the expenses regarding the salary and personal expenses of the Governor. The French Delegation must reserve its position on the second point, that is, the deficit of the Free Territory. The French Government has not examined this question. Even if it had the last word belongs to Parliament as credits would have to be voted. With respect to this second point, the decision is not so pressing. The Free Territory will be established in a few months—after the entry into force of the Treaty. During this period we should make a careful study of the financial situation there. The question is—who is to study this matter, the CFM or an organ of UNO? We think it better to request UNO to take up this question at once. We could ask the Trieste Commission to study this matter, that is, whether UNO could conduct such an inquiry.

M. Molotov: The Soviet Delegation cannot state an opinion on this matter since it has no information.

M. Couve de Murville: We are all in the same box. That is the reason for studying it.

Mr. Byrnes: I certainly am in that box. I think we must assume the responsibility for the Free Territory. It will take some time to secure the ratification of the Italian Treaty. In the meantime an investigation could be made by the General Assembly of the probable costs the UNO would have to assume. It seems to me that we will have to ask for an investigation now and that the Director General should be asked to pay out of his contingent funds an amount which would be authorized by the Security Council and approved by the Budgetary Committee. We should ask the Committee to investigate the administrative costs of the Territory. There should be no difficulty in this connection. The difficulty would come over the amount of the deficit. The Italian Government has been meeting this deficit up to the present time and could give the Committee an indication of the amount of this deficit. I see no other course to pursue than to ask UNO to set up a committee to conduct this study. When the Governor arrives in Trieste he can draw up a report on these fiscal matters. But the Committee should make an initial study in order to ascertain the operational costs.

M. Molotov: I cannot express any view on this matter since I have no information. Why is any deficit necessary? The U.S. and U.K. have been administering Trieste for 18 months. They are familiar with the situation but I am not and I therefore cannot take part in any discussion.

Mr. Byrnes: I don’t know why there is a deficit. That is precisely why I want an investigation. Any committee that goes to the area can discuss this matter with the military authorities in order to obtain an estimate of the administrative costs. We should determine now that our proper course is to proceed to obtain information regarding the financial situation of the area. The best way would be to investigate the matter on the spot. I understand that there is an emergency fund of the United Nations. If the Security Council should make a recommendation, which is approved by the Budgetary Committee, money could be paid out by the Secretary General for this purpose.

M. Molotov: This discussion has not clarified the situation. Maybe our Experts can do so.

Mr. Byrnes: It is clear to me. We have the Free Territory but there is no cash to run it. We must provide the money to set up the administration. The best course would be to have UNO investigate the matter and find out how much money is needed. We should ask the General Assembly to recommend the necessary funds. What objection could there be to that?

M. Molotov: Are there any more remarks? I propose that we refer this question to our Economic Experts.

(The Ministers agreed to refer this matter to the Economic Experts.)

Twelfth Report of Military and Air Experts (CFM(46) (NY)48)⁶⁰

The Ministers approved this report.

M. Molotov: We should ask our Naval Experts to finish their work on the Italian Navy tomorrow.

Reparations

M. Molotov: We will go on to reparations.

Mr. Bevin: I think Mr. Molotov undertook to reconsider this question.

M. Molotov: Of course, I will be disposed to accept some sort of compromise solution.

Mr. Bevin: M. Couve de Murville and I put forward a proposal that Yugoslavia should receive 125 million from Italy and 25 million from Bulgaria, and that Greece should receive 105 million from Italy and 45 million from Bulgaria, making a total of 150 million for each.

M. Molotov: The last time I suggested a total figure of 140 million dollars for each. Mr. Bevin suggested we proceed from the figure of 150 million. The compromise lies somewhere in the middle. (General Laughter).

Mr. Bevin: No. No. You agreed to 150 million. There was only the question of how it should be split.

M. Molotov: Yes, that was the last stage. I had forgotten.

Mr. Bevin: I suggest that Yugoslavia get 125 million from Italy, 25 million from Bulgaria, and that Greece get 105 million from Italy and 45 million from Bulgaria.

M. Molotov: What about Albania?

Mr. Bevin: Let’s take Yugoslavia and Greece first.

M. Molotov: We can decide them together.

Mr. Byrnes: My position on this proposal is that it adds 30 millions to the amount to be paid by Italy—30 millions more than the United States thought that Italy should pay and 30 million dollars more than the Conference by a two-third’s vote thought she should pay. It reduces the amount Bulgaria should pay by 55 million dollars. If anybody wants to help Albania by having Bulgaria pay 5 million more, I am willing to listen, but I am unwilling to have Italy pay any reparations to Albania. Italy has paid Albania a lot in assets but we should not add to the burden of Italy by adding 30 million dollars to what the Conference recommended. We have raised the reparations to be paid by Italy according to the proposal of the United Kingdom to 255 million plus the 100 million to the Soviet, making a total of 355 million.

M. Molotov: Bulgaria has no relevance to the question of reparations for Albania. No one in Albania has raised that question. As to Italy, I recall that at Paris ten delegations voted against ten others and one abstention in favor of reparations for Albania, although in a smaller amount. The Conference decided Albania should be entitled to reparations. There is agreement on that point by the United Kingdom, United States and France. It is difficult to challenge the right of Albania to reparations.

Mr. Byrnes: I think that nowhere can be shown that the Conference ever voted in favor of Albania getting one single dollar of reparations. We must keep the record straight. The first proposal to pay Albania 25 million dollars was rejected 12 to 6; the second proposal to pay Albania 5 million was rejected 13 to 7; the last proposal for no reparations for Albania got a vote of 10 to 10. Even admitting that 10 delegations thought Albania should get reparations, 10 is a minority. In Albania there is more than 100 million dollars worth of private and state property belonging to Italy which we expect to remain in Albania. Why should we add 5 million more in reparations in the absence of a Recommendation of the Conference? I object because it will be taken from Italy. I don’t see at all why Italy should pay Yugoslavia 125 million dollars in violation of the Conference Recommendation that it pay only 100 million.

M. Molotov: Mr. Byrnes is right when he says that the proposal of 25 million dollars for Albania was rejected by a vote of 12 to 7 with one abstention and the proposal for 5 million dollars was rejected by a vote of 13 to 7 with 1 abstention, but among those who voted against the 5 million dollars were the U.S.S.R., Ukraine and Yugoslavia, because they thought the amount was not enough. Therefore, it is not possible to think that there were 13 votes cast against that proposal. There was no majority in the Conference against the proposal to pay reparations to Albania. The vote for no reparations for Albania was rejected by a vote of 10 to 10 with 1 abstention. Thus, one half of the delegations were for reparations and one half against, with 1 abstention. Therefore, when it is a question of a symbolic figure for Albania, such as 10 million dollars, we could meet Albania on this figure. It will be hard, I think, to reach agreement as to the outstanding points on reparations from Italy and Bulgaria unless we take such a decision.

Mr. Byrnes: The majority of the Conference never voted for one dollar for Albania. If a minority of 10 voting against a motion for no reparations is influential, then we certainly ought to stand by a conference vote of 15 to 0 with 6 abstentions for 100 million dollars for Greece with the understanding that 50 million dollars should be given to Yugoslavia. Let’s stand by the 15 to 0 with 6 abstention vote for 100 million for Yugoslavia rather than the 10 to 10 with 1 abstention vote to give Albania no reparations. On the question of reparations your colleagues have gone far to meet you. The Conference voted 13 to 6 that the reparations from Bulgaria should be 125 million because you object we have gone down to put the reparations from Bulgaria at 70 million dollars, 55 million dollars less. The Conference voted 15 to 0 that Italy should pay 100 million dollars and because you object we have raised that to 125 million. There does come a time when concession can go far enough and we should not add reparations for Albania in view of what has just been recited.

Mr. Bevin: I was willing to accept the Conference Recommendation but what did surprise me was when we got the 150 million then Mr. Molotov attempted to increase the amount from Italy beyond the 30 million which was used in Mr. Byrnes’ original proposal. Mr. Molotov says that he cannot settle unless we agree to Albania getting something. Suppose I did agree to that, then it is quite clear that you would (Mr. Molotov) promptly come back to me and want to further increase the amount from Bulgaria. I hate this method of bargaining. We have put up a proposal of 30 million. It isn’t my proposal; it was put up to me by France and the United States. I decided not to hold out against it. Now the Soviet Union proposes to put up the amount for Italy and not to hold the Conference Recommendation. We must fix the amount from Italy. We started off with the Conference Recommendation that Italy pay 200 million and Bulgaria 125 million, now we have Italy paying 230 million and Bulgaria 70 million. We had better fix the totals. We had better hold Italy at 230 million and Bulgaria at 80 million. I am quite willing, however, to leave it as it is, but if you have another for Albania on top of that, that means 240 million from Italy against the Conference Recommendation of 200 million. It would be difficult to justify this when we have an overwhelming vote of that character. On top of that we have the 25 million for Ethiopia.

M. Molotov: In the Draft Treaty, Albania was mentioned among the countries to receive reparations from Italy, and in the Conference Recommendation Albania was listed with Yugoslavia, Ethiopia and Greece. The Soviet Delegation is willing to withdraw its objection as regards the division of 150 million dollars between Bulgaria and Italy and to associate itself with the suggestion that Bulgaria pay 45 million to Greece and 25 million to Yugoslavia, provided we reach agreement as to 10 million reparations for Albania.

Mr. Byrnes: In the Draft Treaty all that was said about Albania was: “Note, the claims put forward by other Powers, in particular France, Yugoslavia, Greece, Albania and Ethiopia will be considered in the Peace Conference together with a means whereby and to the extent to which they shall be met.” As to Albania being mentioned in the Conference Recommendation, it is there but every time there were big old brackets indicating that there were no reparations for Albania.

M. Molotov: Still Albania, even after the Conference, is not forgotten among those who are to receive reparations.

Mr. Byrnes: Nor forgotten among those to be put in brackets.

M. Molotov: We have no brackets in our copy, only where figures should be there is a blank.

Mr. Byrnes: I am in favor of giving them just that—blank.

M. Molotov: Let us go on to the question of compensation. If we decide the preceding question, we should quickly decide this question.

Mr. Byrnes: How much will Italy pay?

M. Molotov: Less than she ought.

Mr. Byrnes: There is even argument on that. If we can’t agree I don’t want to add anything to what I have already said.

M. Molotov: Our position and the United States’ position is difficult on this question since we voted for 25 percent.

M. Couve de Murville: You were beaten on that vote.

M. Molotov: That is true.

[At this point, one page of typescript in the source text is missing. In place of the missing portion, there follows the relevant segment of the Rough Draft of the United States Delegation Minutes as included in the CFM Files, Lot M–88, Box 2079, CFM Minutes.]

Mr. Bevin: What are we going to do?

M. Molotov: The Chairman is waiting for advice.

M. Couve de Murville: We should accept the recommendation of the Conference.

Mr. Bevin: I do want you to appreciate that in both difficulties neither of you were greatly affected by it and we, who are paying out, were opposed. Yet we are left to pay in Italy our own nationals the difference between whatever you vote and I do think that as we are affected, and we are affected in paying other nationals as I have already explained, and it is a bit of a difficulty for me to ask Commons—to say I voted for the British treasury to pay up in Italy to British nationals on the one side and to say that I am paying other people whose property is damaged in London full compensation. It is all right if you have got all the assets in the country, you can be generous, but this is a question of treating one’s country equally with other people. That is what we are doing. When the 75% was carried I said all right, I will accept it, but when 50% is being suggested I don’t think it is adequate, I don’t think it is right. A final offer, with a view of trying to meet my colleagues on this business, I would reach two-thirds.

Secretary Byrnes: Mr. Chairman, I’ll agree to the two-thirds instead of three-fourths.

M. Molotov: It is a new proposal.

Mr. Bevin: Well, it is the only proposal. We are sitting around this table to try and arrive at a compromise. If I make a suggestion it is called a new proposal. I take the risk in a preliminary way, if my colleagues will agree, I don’t know what France said, but I would personally advise the acceptance of two-thirds and I think we ought to be met on this. I agreed to cut down the reparations recommendation made to try and meet my colleagues and now I have agreed to cut this down to two-thirds.

Mr. Bevin: It has been up before us I don’t know how many times and put off I supose for bargaining purposes. I think it really ought to be settled. I made no condition when I reduced the reparations figure.

M. Molotov: The Soviet delegation voted at the Conference in favor of the proposal for 25 percent compensation, but prior to the Conference, still earlier, the Soviet delegation considered the amount of compensation could be increased up to 33 percent, and later 40 percent. It remains for me to recall that when the question of reparations for the Soviet Union was discussed compensation was fixed at 5 percent from Italy and whereas we are meeting our colleagues on this matter as well as allied countries on this subject we think that certain bounds should not be exceeded. Even if we accepted the figure I mentioned there will be great difference between what the Soviet and other citizens get. Still we have to remember that at home we shall be asked why we agreed to accept such a high percentage of compensation in respect of foreign nationals and such a low figure in respect of Soviet nationals. Therefore, we ought not to forget these great differences between the two kinds of compensation.

Mr. Bevin: But Great Britain is getting no reparations at all.

M. Molotov: Great Britain is lucky because her territory was not invaded by the enemy.

[Here ends the excerpt from the Rough Draft of the United States Delegation Minutes.]

Mr. Bevin: I don’t know that invasion could be so much worse than the five war years I lived in London. We spent all our external assets in the common interest and now in all these things we seem to be singled out for unfair treatment. That’s the thanks we get.

M. Molotov: Mr. Bevin’s statement is confusing as our approach is fair. We are trying to meet our colleagues. The outside figure that the Soviet Delegation can accept is 50 percent.

M. Couve de Murville: The French Delegation has strict instructions to abide by 75 percent, the Recommendation of the Conference. Our claims for reparations on Italy are very moderate. We asked for the reconstruction of French property in Italy which has been damaged during the war. We do not put a great burden upon Italy and no external burden whatsoever on the balance of payments. All these payments will be made in lira and they will benefit the Italian economy.

Mr. Bevin: It seems to me, Mr. Chairman, that there are several things linked up together here, the outstanding point on reparations, compensation, paragraph 4 of Article 24 in the Roumanian Treaty and Shipping. They all represent the general treatment of my country. We have had our requests rejected in all cases and I don’t think that it is right and fair of the Soviet to reject it. They have been subject to long discussions in the Economic Committee and before the Conference where they were the subject of recommendation. All have been rejected. Great Britain has not been treated fairly.

M. Molotov: If after all our concessions Mr. Bevin draws such conclusions, I have nothing to add.

Mr. Bevin: We all have made concessions to each other. When I gave way on reparations in Paris, the first thing was put to me when I went back was why I did not settle this thing at the same time. I advised my country that I thought the thing would be settled and it wouldn’t meet the opposition to it that I have found since I have been in New York. It is very vital to us. I would ask that we find a method of arriving at a solution. Take fair prices—I should be quite content to let this go to the Four Ambassadors and have a right of appeal to an independent commission so as to see that justice was done. That is another solution which would satisfy me.

Mr. Byrnes: Am I correct in the impression that you would leave to the Four Ambassadors to determine the price to be paid and if they could not agree then you would have it determined in accordance with the procedure we have had in other things?

Mr. Bevin: Yes. There are three stages. First, negotiation with the Roumanian Government; second, the Four Ambassadors and third if the Four Ambassadors fail to find a settlement then final decision by the Commission.

M. Molotov: I am not in a position to reply to this question as it has never been put before. It affects the reparations of the Soviet Union and it will not be correct to accept it if it is bound to have any adverse effect on reparations to the Soviet Union. I must consult my experts.

Mr. Bevin: All the oil companies—British, American, Russian and Roumanian are in difficulties in the present situation.

M. Molotov: We could not take the road that would lead us to double prices, some for one category of nationals and different prices for other categories of nationals.

Mr. Bevin: I will reflect on compensation again. These other things, raw materials and so on, are all bound up. It is in the interest of Roumania and Italy to see a solution to these questions.

M. Molotov: It is 7:30. Let us adjourn.

Mr. Bevin: Regarding the Danube, we did agree to the principle. You (Addressing Mr. Molotov) wanted to study the draft.

M. Molotov: We have not yet completed the study of this question. We will meet again tomorrow at 4:00 p.m.

The meeting adjourned at 7:30 p.m.

55. For a list of persons present at this meeting, see the Record of Decisions, infra.
56. The Report under reference was that of the 127th Meeting of the Deputies, December 4, 1946, 11 a.m.
57. Article 76 of the Italian Treaty, as presented to and approved by the Council at this meeting, was included in the Treaty of Peace with Italy as article 87.
58. The document under discussion in this portion of the Council’s meeting was CFM(46) (NY)43(Revised), December 4, 1946, p. 1416.
59. Under consideration here is article 9 of CFM(46) (NY)43(Revised), December 4, p. 1416.
60. This Report stated that in pursuance of the instructions of the Council of Foreign Ministers at its 14th Meeting, December 3 (see pp. 1382 and 1400), the Committee of Military and Air Experts recommended a redraft of article 6 of CFM (46) (NY)43. The text of that redraft is included in footnote 67, p. 1418.