860F.51/5–646: Telegram
The Acting Secretary of State to the Ambassador in Czechoslovakia (Steinhardt)
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477. Board Directors Eximbank May 8 approved $50 million credit to Zecho subject to notification by Dept that prerequisites have been met.
Prerequisites are Zecho notes stating agreement (1) to give US full info re its international economic relations similar to info made public by US; (2) to make adequate and effective compensation to nationals and corporations of US whose properties are requisitioned or nationalized; (3) that economic relations between two countries will be organized on principles contained Article VII Mutual Aid Agreement37 so as to result in elimination all forms discrimination in international commerce and reduction tariffs and other trade barriers; (4) agreement with general tenor Proposals Expansion World Trade and undertake to abstain, pending participation international trade conference, from adopting new measures prejudicial to conference objectives; and (5) to enter negotiations at early date to conclude with US comprehensive treaty friendship, commerce and navigation.
Interim commercial agreement tentatively dropped as credit prerequisite because Dept believes (a) points 3 to 5 above preferable to Zecho proposals urtel 670, May 1 and acceptable for present; (b) Zecho will experience difficulty living up to terms proposed interim commercial agreement, especially para 3 and 5, should Dept insist on present language; (c) conclusion of workable agreement acceptable to both parties would require considerable time since Zecho Embassy informally advises that para 3 and 6 are objectionable; and (d) it may be in US interest to announce loan agreement next week if possible.
Reasons for (d) are reported Soviet grain deliveries to Zecho scheduled begin May 15 and your urgent recommendation (urtel 704, May 638) cotton credit be granted as soon as possible. This matter [Page 197] under discussion with Eximbank. For your info, Eximbank loan agreement and notes embodying prerequisites would be negotiated with Hurban, Hanč, Hajny representing Zecho Embassy.
Dept aware views para 3 urtel 694, May 3 and urgently requests your views on advisability of announcing Eximbank loan agreement, on above prerequisites, next week.39
- Agreement between the United States and Czechoslovakia regarding mutual aid and the prosecution of war against aggression, signed July 11, 1942; for text, see Department of State Executive Agreement Series No. 261, or 56 Stat, (pt. 2) 1562.↩
- In telegram 704, May 6, 1946, from Praha, Ambassador Steinhardt reported that the Czechoslovak Minister of Foreign Trade had requested a 24-month repayment period rather than the 15-month period proposed under the contemplated Export-Import Bank cotton credit to Czechoslovakia. Steinhardt added the following comment: “I urgently recommend that the concession be granted in order to start the commercial movement of cotton to Czechoslovakia as soon as possible … the arrival of American commercial cotton in Czechoslovakia will have the immediate effect of relieving the textile industry from its dependence on Soviet.” (860F.51/5–646) Telegram 556, May 29, to Praha, stated that the Board of Directors had, on May 29, approved a cotton credit of $20 million for which the repayment period would be 24 months (860F.51/5–1346).↩
- In telegram 750, May 11, 1946, from Praha, Ambassador Steinhardt urgently recommended that no announcement regarding the Export-Import loan to Czechoslovakia be made until after the Czechoslovak elections on May 26. Steinhardt added: “The Communist Party in Czechoslovakia which is by far the best organized and most aggressive and which controls the key Ministries including the Ministry of Information in my opinion would immediately claim that the loan had been made as a result of the efforts of the Communist Party and would thereby gain a decided political advantage among the masses who are susceptible to this kind of distortion after so many years of a controlled press.” (860F.51/5–1146)↩