Foreign Relations of the United States, 1946, Eastern Europe, The Soviet Union, Volume VI

861.24/6–2746

Revised Draft of Proposed Agreement Between the Governments of the United States and the Soviet Union on Settlement of Lend-Lease and Reciprocal Aid and War Claims

confidential

[ Washington ,] June 27, 1946.

Pursuant to the agreement of June 11, 1942 between the Governments of the United States of America and the Union of Soviet Socialist Republics on the principles applying to mutual aid in the prosecution of the war against aggression, the undersigned being duly authorized by their respective Governments have agreed as follows:

1. The following shall be a complete and final settlement for lend-lease and reciprocal aid, not otherwise provided for under the Agreement of October 15, 1945²⁸ or under such agreements as were concluded in accordance with the terms set forth by the Government of the United States of America on May 30, 1945.²⁹ It shall also be a complete and final settlement of all claims of each Government against the other arising during World War II. In making this settlement both Governments have taken full cognizance of the benefits already received by them in defeat of their common enemies. They have also taken full cognizance of the general obligations assumed by them in Article VII of the agreement of June 11, 1942 and the understandings reached this day with regard to commercial policy. (Pursuant to this settlement both Governments will continue to discuss arrangements for the attainment of the economic objectives referred to in Article VII of the Agreement of June 11, 1942.) In the light of the foregoing, both Governments concur that no further benefits will be sought as consideration for lend-lease and reciprocal aid and for claims arising from the conduct of World War II.

2. (a) The term “Lend-Lease Article,” as used in this agreement, means any article (a) transferred prior to September 20, 1945 by the Government of the United States under the Act of March 11, 1941³⁰ to the Government of the Union of Soviet Socialist Republics or (b) transferred to any other government under that Act and retransferred prior to September 20, 1945 to the Government of the Union of Soviet Socialist Republics.

(b) The term “reciprocal aid article” as used in this agreement means any article transferred by the Government of the Union of Soviet Socialist Republics to the Government of the United States during the period June 22, 1941 to September 20, 1945 without specific arrangements for payment.

3. (a) The Government of the Union of Soviet Socialist Republics hereby acquires and shall be deemed to have acquired on September 20, 1945, without qualification as to disposition or use, full title to all lend-lease articles transferred on or before September 20, 1945, other than those covered by paragraphs 6 and 8 hereof.

(b) The Government of the United States hereby acquires and shall be deemed to have acquired on September 20, 1945, without qualification as to disposition or use, full title to all reciprocal aid articles transferred on or before September 20, 1945.

(c) As consideration for the acquisition of title to lend-lease and reciprocal aid articles by the two governments as set forth above there shall be due to the Government of the United States from the Government of the Union of Soviet Socialist Republics a net sum of $ . . . . . . . .

4. The two Governments hereby agree that all financial claims whatsoever of one Government against the other which arose out of lend-lease or reciprocal aid or otherwise arose, on or after June 22, 1941 and prior to September 2, 1945, out of or incidental to the conduct of World War II, and which are not otherwise mentioned in this agreement, are hereby waived and neither Government will hereafter raise or pursue any such claims against the other. As consideration for the waiver of claims by the two Governments there shall be due from the Government of the . . . . . . . . . . . . to the Government of the . . . . . . . . . . . . a net sum of $ . . . . . . . .

5. (a) The total amount due under this agreement shall be the total of the net sums specified in paragraphs 3 and 4 above, namely: $ . . . . . . . due from the Government of the Union of Soviet Socialist Republics to the Government of the United States. Payment of this total amount shall be made by the Government of the Union of Soviet Socialist Republics in dollars except as provided in paragraph 7 of this agreement on or before July 1976 in twenty-two annual installments, the first of which shall become due and payable on July 1, 1955. The amounts of the annual installments shall be as follows: each of the first four installments shall be $ . . . . [an amount equal to 2.5 percent of the total amount];³¹ each of the next four installments shall be $ . . . . . [an amount equal to 3.5 percent of the total amount]; each of the next four installments shall be $ . . . . . [an amount equal to 4.5 percent of the total amount]; each of the next four installments shall be $ . . . . . [an amount equal to 5.5 percent of the total amount]; and each of the last six installments shall be $ . . . . . [an amount equal to 6 percent of the total amount]. Interest on the unpaid balance of the total amount as set forth above shall be paid by the Government of the Union of Soviet Socialist Republics at the fixed rate of 2⅜ percentum per annum accruing from July 1, 1946. Interest shall be payable annually, the first payment to be made July 1, 1947.

(b) The obligation of the Government of the Union of Soviet Socialist Republics may be discharged by the delivery of gold at points as may be designated by the Government of the United States. Such gold will be valued at the buying price of gold as specified in the regulations issued under the Gold Reserve Act of 1934 in effect at the time of each delivery.

(c) If by agreement of both Governments it is determined that, because of extraordinary and adverse economic conditions arising during the course of payment, the payment of a due installment would not be in the joint interest of the United States of America and the Union of Soviet Socialist Republics, payment may be postponed for an agreed upon period.

(d) The Government of the Union of Soviet Socialist Republics may anticipate the payment of any installment of principal, or any part thereof, provided that this right of anticipation may not be exercised when any installment of principal or interest is past due and unpaid.

6. (a) The Government of the United States of America reserves the right to recapture at any time after September 1, 1945 any lend-lease articles in the categories listed in Appendix I hereto³² which, as of the date upon which notice requesting return is communicated to the Government of the Union of Soviet Socialist Republics, are not destroyed, lost, consumed or disposed of in accordance with this agreement. The Government of the United States does not intend to exercise generally this right of recapture. Whenever the Government of the United States notifies the Government of the Union of Soviet Socialist Republics that it desires the return of any lend-lease articles under this paragraph, the Government of the Union of Soviet Socialist Republics will make the necessary arrangements for effecting the physical return of such articles to the custody of the Government of the United States at such points as the latter may designate and will use its best endeavors to see that all reasonable care is exercised in order to prevent loss of or damage to such articles during the process of return. Full responsibility in connection with any lend-lease articles covered by this paragraph not recaptured or accepted for return by the Government of the United States shall lodge with the Government of the Union of Soviet Socialist Republics. The Government of the United States may decline to accept any lend-lease articles covered by this paragraph which may be offered for return. Except as provided in paragraph 6(b) hereof the Government of the Union of Soviet Socialist Republics shall not be required to notify the Government of the United States before disposing of or abandoning any lend-lease articles covered by this paragraph which become surplus to the requirements of the Government of the Union of Soviet Socialist Republics.

(b) Retransfers of lend-lease articles in the categories listed in Appendix I hereto shall not be made by the Government of the Union of Soviet Socialist Republics without the prior consent of the Government of the United States.

7. (a) The Government of the Union of Soviet Socialist Republics agrees to transfer to the Government of the United States local currency of the Government of the Union of Soviet Socialist Republics as follows:

(1) An amount not to exceed the equivalent of 10,000,000 United States dollars to be transferred in annual installments beginning on July 15, 1947 if and when requested by the Government of the United States but any one installment not to exceed an amount equivalent to 500,000 United States dollars. The amounts so transferred will be used to defray the expenses of United States citizen students who may be selected by the Government of the United States with the approval of the Union of Soviet Socialist Republics for study at centers of learning in the Union of Soviet Socialist Republics. Such expenses may include the cost of passage of such students to and from the United States on Soviet operated vessels. It is agreed that the Government of the Union of Soviet Socialist Republics will render all possible assistance to the Government of the United States and to the selected students in providing for their welfare while studying in the Union of Soviet Socialist Republics.

(2) Such other amounts as the Government of the United States may request at any time or times for the payment of any or all expenditures in the Union of Soviet Socialist Republics of the Government of the United States and its agencies.

The dollar equivalent of local currency of the Union of Soviet Socialist Republics transferred under this sub-paragraph shall be credited to the amounts payable under the terms of paragraph 5 hereof: first to past due interest, if any, and then pro rata to all remaining unpaid installments of principal in amounts adjusted to the proportionate size of such installments. This dollar equivalent shall be computed on a basis of such exchange rate (par value) as may be established by the International Monetary Fund provided that both countries are members thereof when such rate is used. If there is no such rate, the rate shall be that rate most favorable to the United States which was used in any transaction of the Union of Soviet Socialist Republics with any party during the twelve months period preceding the transaction under the terms of this agreement for which an exchange rate is required. Any amounts so transferred shall not be in excess of the balance of principal then outstanding, plus matured interest as provided in paragraph 5 hereof. Except by mutual agreement between the two Governments, the Government of the United States shall not be entitled to receive in any single calendar year local currency of the Union of Soviet Socialist Republics under the terms of this sub-paragraph or other benefits under the terms of sub-paragraph 7 (b) the combined total value of which is in excess of the equivalent of . . . . . . . United States dollars.

7. (b) When the Government of the United States wishes to acquire any interest in property, real or personal, tangible or intangible, or to improve any property in which it has an interest, the Government of the United States will request at any time or times and the Government of the Union of Soviet Socialist Republics agrees at any such time or times to enter into negotiations with the Government of the United States and to use its best efforts to consummate without any undue delay appropriate contracts by mutual agreement wherein the Government of the Union of Soviet Socialist Republics will furnish to the Government of the United States the interest in properties or improvements which it desires or which its representatives have selected, at fair terms and prices. With reference to properties required for the housing of official activities of the Government of the United States, such as the diplomatic and consular services and their attached personnel in the Union of Soviet Socialist Republics, and with reference to a student hostel in Moscow for the housing of United States citizen students it is mutually agreed that the responsible agencies of the Government of the United States and the Government of the Union of Soviet Socialist Republics shall cooperate in the selection of suitable sites and the preparation of plans and specifications for appropriate buildings to be constructed as soon as possible thereon by the Government of the Union of Soviet Socialist Republics under joint supervision. The use of such land and buildings shall be for a long term of years. When performance of any such contract is made by the Government of the Union of Soviet Socialist Republics the United States dollar equivalent of the fair value received, computed at an exchange rate as provided in sub-paragraph 7 (a) hereof, shall be credited to the amounts payable under the terms of paragraph 5 hereof: first to past due interest, if any, and then pro rata to all remaining unpaid installments of principal in amounts adjusted to the proportionate size of such installments. The total value of property to be delivered by the Government of the Union of Soviet Socialist Republics in any calendar year shall be subject to the annual limitation of . . . . . . . specified in subparagraph 7 (a) hereof.

8. (a) Ships, boats, barges and floating drydocks of the United States Navy transferred to the Government of the Union of Soviet Socialist Republics under the provisions of the Act of March 11, 1941 as supplemented by the Act of February 19, 1943 and not destroyed or lost shall be returned by the Government of the Union of Soviet Socialist Republics at places to be designated by the Government of the United States. Such returns shall be effected not later than 90 days following the signing of this agreement. A list of such vessels transferred is set forth in Appendix IIA.³³

(b) Dry cargo vessels, tankers and other merchant watercraft listed in Appendix IIB³³ and not destroyed or lost shall be returned forthwith to the custody of the Government of the United States at United States ports.

28. Foreign Relations, 1945, vol. v, p. 1043.
29. Ibid., 1009.
30. 55 Stat. 31.
31. Brackets in this paragraph appear in the original.
32. Not printed.
33. Lists not attached to file copy.
33. Not printed.