740.00119 Council/12–647: Telegram

The Secretary of State to the Acting Secretary of State 12

top secret
urgent

Martel 40. For Lovett from the Secretary. At a meeting with Bevin Thursday13 morning, at which Douglas and Dixon, Bevin’s secretary, were present, the following matters were discussed:

1.
Middle East
2.
Austrian Treaty
3.
Tactics toward Germany
4.
Palestine

I shall comment on each separately, as follows:

1.Middle East. Memorandum being mailed.14

2. Austrian Treaty. I expressed some concern at the way the negotiations at the Council were developing in regard to Austria. I said our government wanted an Austrian treaty but was afraid of being manoeuvered into a position under which we should have agreed to a course regarding German assets in Austria—i.e. French proposal15—which could be cited by the Soviet delegation as a precedent for their claim to reparations from current production in Germany without getting in return Soviet agreement, and, as a result, an Austrian [Page 751] treaty. I said I thought Congressional opinion would also dislike the French proposal regarding German assets in Austria for the same reason; namely, that it might lend color to the Soviet argument for reparations from current production in the case of Germany. Furthermore, I did not want to be committed to the French proposals in regard to Austria until we saw how the discussion developed. In other words, I did not wish to give away a point on Austria except in return for some advantage.

Bevin said he found himself in a difficult position at the CFM meeting December third.16 He had thought the US Government had accepted the French proposal regarding German assets in Austria; moreover, his interpretation of the Soviet move in suggesting, on December third, deferment for two months of the German treaty, was that the Russians wanted to break off the present discussions so as to get out of any treaty with Austria. He had, therefore, thought it best to act as he had in order to deprive the Soviet delegation of any chance to break off the discussions. The Soviet reasons in wishing to break off the discussions, Bevin thought, was roughly the following: If the Communist attempt to upset the constitution in France failed,17 and if Congress passed the Interim Aid Bill,18 the Russians would find themselves in a weakened position at the present negotiations. Bidault had told him that the French Government expected that they would have broken the Communist move by next Sunday, December 7th. Reverting to discussions on Austria which took place December third, Bevin pointed out that he had accepted the US proposal regarding compensation, although two to three million pounds worth was involved for them in order to get agreement between the US and Britain.

In regard to the French proposals regarding German assets in Austria, I would like to make it plain that if the Soviet delegation should accept them and not distort them, the US Government would, on its own part, also be prepared to accept.

3. Tactics toward Germany. I said that I had been turning over possible courses of action, if it became clear that a stalemate was going to be reached. One method which had occurred to me was that at some stage I should make a statement listing the six or seven main points on which it was essential to reach agreement regarding the economic position of Germany if the German economy was to be stabilized and to declare that if no settlement could be reached between the four [Page 752] powers then the US and Great Britain would have to take the necessary steps on their own.

Bevin said that he had already stated at the conference that H.M.G. could not tolerate economic chaos in Germany. He felt that the country was behind him in expecting us to take our own measures to adjust German economy if the discussions here failed. Indeed, the general feeling in his country seemed to be prepared for a breakdown of the conference. In his view, at the appropriate time we ought to force the debate on the main outstanding economic questions and also possibly indicate our requirements for the political organization of Germany in a way to bring out that the Soviet objective was a Communist-controlled Germany. He would, however, like to discuss the matter with his colleagues before giving me a final answer. It was largely a matter of tactics and timing. He said that he would ask Dixon to keep in touch with Douglas on the point.

I said that, quite frankly, what would be popular in the US would be that I should break off and tell the Russians to go to the devil, but that this public response would be temporary and would be followed later by a different one when the implications were fully understood. I, however, tentatively thought that it might be wise to indicate the differences on matters of real substance and to suggest that unless agreement could be had on them we would have to proceed—always making it clear, however, that we were not permanently breaking. It was important, of course, to choose our ground carefully and to time it to the best possible advantage; we must at the same time be careful to avoid allowing ourselves to be manoeuvered by the Russians into a situation where the break occurred on what would later appear to be an inconsequential point which would not carry conviction with our public opinion. I felt that Molotov must realize that we, for our part, would endeavor to end the discussion, if it had to break down, in a way which would carry conviction with our public opinion; Molotov was thus constantly manoeuvering to guard himself against being put in that position.

Bevin said that we ought not entirely to exclude the possibility of agreement. If Molotov after probing for our soft spots, saw that there were none, it was possible that he might receive instructions to agree as at the last moment he had agreed to the Italian treaty in New York last December after Mr. Byrnes had made it clear to him that no further concessions could be expected from the US. In any case it was essential to stand firm, and he favored the method of short answers on our part—“no comment on nonsense.”

I agreed that if the Communist moves in France failed and the Interim Aid Bill went through Congress, the western powers would [Page 753] enjoy a greatly increased momentum in this conference. Summing up, I said that my present inclination was at some carefully timed stage in the conference to specify certain steps which must be taken in order to adjust German economy, and if four power agreement on these steps could not be reached, then we should be obliged to take them on our own immediately. It was essential that the US and Great Britain should act together if this course was decided on.

Bevin said he would study the whole position in the next 12 or 24 hours.

4. Palestine.

[The remainder of this telegram reported on a portion of the conversation dealing with Palestine. Documentation on the Palestine question, including the portion of text omitted here, is included in volume V.]

Marshall
  1. A copy of this telegram was sent to President Truman on December 8.
  2. December 4.
  3. The memorandum under reference has not been found.
  4. The French proposal was set forth in documents CFM (ATC) (47) 76, October 8, 1947, p. 620 and CFM(47) (L)8, November 27, 1947, p. 799 and was discussed in document CFM(47) (L)15, December 2, 1947, p. 798.
  5. See telegram 6306, Delsec 1517, December 3, from London, p. 746.
  6. For additional documentation on the concern of the United States over the political situation in France, see volume iii .
  7. In November 1947 a Draft European Interim Aid Bill was introduced to a special session of the Congress, and a compromise bill was voted on December 19, 1947; for documentation regarding this Interim Aid Bill, see The Political and Economic Crisis in Europe, in volume iii .