Foreign Relations of the United States, 1947, Council of Foreign Ministers; Germany and Austria, Volume II

CFM Files: Lot M–88: Box 58

Report of the Deputies for Germany to the Council of Foreign Ministers ⁹⁷

secret
CFM (47) (M) 98

April 3, 1947.

Statement of the Representatives of the Inter-Allied Reparations Agency

In compliance with the instructions of the Council of Foreign Ministers of March 18, 1947,⁹⁸ the Deputies heard in their meeting of March 29, 1947, a statement by the President of the Inter-Allied Reparations Agency, Mr. Jacques Rueff. At their further meetings on March 31 and April 1, the Deputies put questions to representatives of the Agency, Mr. Rueff and Mr. Nigel Sutton, with the object of clarifying the facts relating to the work of the Agency and to the reparation interests of its member states.

(a) The Deputies submit a summary of the main points of Mr. Rueff’s statement, the full text of which is annexed (CFM (47) (M) 87 Appendix A).⁹⁹

(b) They also submit their record of their questions put to Mr. Rueff and Mr. Sutton (CFM (47) (M) 87 Appendix B).¹

(c) The Deputies are of the opinion that sufficient information has been obtained from the representatives of the Agency and that, therefore, it is not necessary for the Council of Foreign Ministers to hear an additional statement by them.

(d) They consider it appropriate to limit their report to the points mentioned above.

The following are the main points contained in the statement by the President of the Inter-Allied Reparations Agency.

1. Reparation deliveries from the western zones of Germany have been so far most unsatisfactory. Member states of the Inter-Allied Reparations Agency desire a speedy revival of deliveries as they feel certain that any prolonging of the present situation would be tantamount to the ultimate failure of the reparation policy as stipulated at Potsdam.

2. “The states represented in the Agency consider they have grounds for considering the Potsdam Agreement as a solemn obligation undertaken by the occupying Powers in relation to them and representing something in the nature of a contract, the fulfillment of which they have the right to demand.” This contract has not been fulfilled.

3. As far as the industrial capital equipment is concerned 143 plants have been notified to the Inter-Allied Reparations Agency by the Allied Control Council. Approximately one half of these are not complete plants but consist of isolated groups of machines removed from war plants. Of the total number of plants only 59 have been actually allocated by the Inter-Allied Reparations Agency, due primarily to delay in the delivery of inventories by the Control Council.

“In fact, substantial deliveries of reparation were suspended in June 1946, actually two months after they began.”

Reparation received by the Inter-Allied Reparations Agency also includes 254 merchant vessels which have been distributed.

4. In commenting on the figures referred to in paragraph 3, Mr. Rueff said: “No one can presume to say that these negligible results are the maximum indemnities stipulated for by the Potsdam Agreement with which Germany is able to offset the losses and suffering she caused.”

5. Whatever level of industry may be fixed in Germany there is a substantial amount of plant surplus which can be made available as reparations. A large number of plants can be earmarked for reparation, in advance of final decisions on the level of industry.

6. The absence of a general program for removal from the three western zones makes it difficult for the recipient States to formulate their bids and to plan the integration of the reparation plants into their national economy. It also impedes the work of the Agency in making allocations.

7. The present position with regard to reparation deliveries was even less satisfactory than in 1921 when Germany paid approximately eight billion gold marks within two years. “It will be said that conditions are not the same, that Germany is more completely ruined than after the other war. That is an undoubted fact. But it is none the less indisputable that the over-industrialization of Germany for military purposes has created conditions in which, despite destruction and the exceptional wear-and-tear of war, there remains an industrial potential which is vastly superior to the requirements of a peace-time economy, no matter what the outcome of present controversies may be.”

8. Administrative difficulties have resulted in long delays. 51 operations are involved in the complete process of allocation for any one item under present arrangements. It would take a minimum of 16 months, but more probably 18 months to 2 years to complete the 51 processes.

9. It is hoped that the political difficulties which have caused the suspension of reparation deliveries to the Inter-Allied Reparations Agency would be resolved by the Council of Foreign Ministers.

10. Mr. Rueff speaking in a personal capacity:

(a) indicated that suspension of the activity of the Allied Reparations Commission was one of the considerations which rendered more difficult the reparation deliveries and the carrying out of the reparations policy laid down at Potsdam.

(b) he added that if the Allied Reparations Commission were to be revived, as two Delgations had suggested, it should function as an organ of the Council of Foreign Ministers rather than as an organ assisting the Allied Control Council since under the latter circumstances it would inevitably conflict with the same results as before.

(c) suggested that an integrated reparation office should be organized within the control administration in Germany and under the authority of the Co-ordinating Committee. Such an office should be staffed with one official at each level, rather than by four (one from each Controlling Power) in order to shorten the present unwieldy procedure for removals.

97. This Report was discussed by the Council of Foreign Ministers at its 23rd Meeting, April 8; see telegram 1263, Delsec 1405, April 8, from Moscow, p. 317.
98. Regarding the instructions to the Deputies, see the United States Delegation Minutes of the Council’s 8th Meeting, March 18, p. 257.
99. The document under reference is not printed; for an authoritative account of Rueff’s statement, see Inter Allied Reparation Agency: Report of the Secretary General for the Year 1947 (Brussels, 1948), pp. 6–7.
1. Not printed.