863.6363/10–2847: Telegram
The Acting Secretary of State to the Embassy in the Soviet Union
1890. You are requested to present the following note to the Sov Govt concerning the seizure by Sov troops of the oil refinery at Lobau Aus on 2 Aug. This property is beneficially owned thru Ger subsidiaries by Socony-Vacuum and Royal Dutch Shell. Soviet action was protested formally by US and UK delegations in Aus Treaty Commission Aug 6 and 11 and subsequently by US and UK elements Allied Commission. Sov delegation ATC avoided issue and referred matter to Allied Commission where Sov representatives Aug 14 referred Keyes to diplomatic channels. Aug 29 Kourasov reply to Keyes letter on subj stated Sov defense for action based on Law 5. Note follows:56
“I am instructed by my Government to bring to your attention its views concerning the seizure by the Sov authorities in Aus of the Oesterreichische Mineraloel Werke at Lobau which occurred on Aug 2, 1947. It is understood that the seizure was based upon the view of the Sov Govt that it is entitled to this property as a German external asset.
[Page 672]Since the ATC has now completed its work without adequate discussion of the case and without any satisfactory explanation being given by the Sov representatives in Aus concerning this seizure the US Govt considers it necessary to state its position as follows:
On July 22 the US Delegation on the Aus Treaty Comm, during the discussion of Ger assets in Aus oil industry, pointed out that the refinery at Lobau is entirely owned by American and Brit companies thru their wholly owned subsidiaries located in Ger. While this fact is not denied by the Sov representatives in Aus it is nevertheless contended by them that the Lobau refinery is liable to be taken as reparations under the Potsdam Agreement of Aug. 2, 1945 and the provisions of Law 5 of the Allied Control Council which vests in the GEPC the property outside Ger of Ger juridical persons.
It is the view of the US Govt that the seizure of this property is not justified on the grounds advanced by the Sov Un and hence that the action of the USSR constitutes a violation of the property rights of US citizens.
The language of Law 5 is sufficiently broad, as was intended, because of economic security considerations, to vest title to property in apparent Ger ownership in the Ger Ext Prop Com pending the requisite investigation and the ultimate transfer of title to external assets actually owned by Germans to the proper reparation claimants in accordance with international agreements.
It has never been contemplated by the US Govt that there should be transferred on reparation account assets not beneficially owned by Germans.
On the contrary the US Govt has and continues to adhere firmly to the view that the beneficial ownership of citizens of the United Nations, when established, must, in conformity with generally accepted principles of law, be recognized and the property returned to its rightful owners.
The interpretation recently given by the Sov Govt to Law 5 namely, that property is to be considered Germ for reparation purposes in all cases in which the owner is a corporation organized under the laws of Germany, disregards the beneficial interest in property which may be owned by the United Nations nationals thru such corporations. That the Sov Un should seriously advance such an interpretation is the more surprising, since it is in conflict with basic principles governing the treatment of United Nations property to which the Sov Un agreed in the treaties with Italy, Roumania, Hungary, Bulgaria, and Finland. In the treaties with these countries, it will be recalled, specific recognition is given to the beneficial interests of UN nationals in properties located in those countries which are held, directly or indirectly, thru corporations or associations which were not themselves UN nationals.
Moreover, the US Govt finds it difficult to consider the Sov interpretation of CC Law 5 advanced in connection with the Lobau case as representing a legitimate difference of opinion regarding legal matter, since it is well known that the Sov Un also maintains the position, with which the U.S. does not agree, that Law 5 is not applicable at all to vest title to Ger assets in Eastern Aus.
Beyond interpretative considerations the US Govt finds it necessary to point out that the position taken by the Sov Un in effect [Page 673] amounts to an attempt to collect reparations from citizens of the U.S. Such an attempt the US Govt regards as completely inadmissable and emphatically protests. In this connection the attention of the Sovt Govt is directed to Annex II of the Protocol of the Conference of Berlin, which records the agreement of the Chief of the Sov Govt to the principle that the burden of reparation should not fall on Allied nationals.
Under these circumstances it is requested that the necessary steps be taken by the Sov Govt to recognize the interest of American citizens in the refinery at Lobau. Moreover, my govt would appreciate the assurances of the Sov Govt that similar seizures of American property will not be effected in the future.”57
Dept is informing Brit Embassy re above note.
Sent to Moscow as 1890; repeated to Vienna as 887.
- The note was delivered to the Soviet Foreign Ministry on October 31.↩
- Telegram 3243, November 20, from Moscow, not printed, transmitted the text of a Soviet reply, dated November 19, rejecting the United States protest printed here in the same terms as earlier Soviet statements on the subject (863.6363/11–2047).↩