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

740.00119 EW/12–2747

The British Embassy to the Department of State ⁴⁰

Aide–Mémoire

Reference is made to the recent conversation of the United States Secretary of State with the British Foreign Secretary on December 17th regarding the question of reparations deliveries to the Soviet Union.⁴¹ In this conversation, Mr. Bevin recalled the conversation which had taken place between them at Moscow when, as Mr. Bevin understood, it had been agreed that both Governments should proceed with deliveries from the Western Zones to the Soviet Union and Poland, as well as to the other Allies. At the recent Council of Foreign Ministers meeting in London, Mr. Bevin had said that His Majesty’s Government intended to carry out the Potsdam decisions on reparations.^41a This implied that His Majesty’s Government, for their part, considered reparations deliveries from West to East should continue to be made. After the Council of Foreign Ministers had ended, the British Cabinet had further considered the matter and had confirmed the view that it would be a great mistake to stop deliveries to the Soviet Union. Mr. Bevin stated that he thought it would be playing into the hands of the Soviet Union if we stopped delivering reparations from capital equipment to them. He also made it clear that he had never been happy when action had been taken in the Control Council which had prevented allocations being made over a long period.

It was clearly stated by Mr. Bevin that His Majesty’s Government considered themselves committed to deliver what they had covenanted to deliver to the Soviet Union—that and no more. On the other hand he was anxious to avoid any conflict with the United States Government over this question. There were bigger things going on in Western Europe which should surely take precedence over this question of surplus equipment.

It had been understood that, on his return to Washington, Mr. Marshall would consider the whole question in the light of His Majesty’s Government’s views, and that Mr. Bevin would then be informed of the considered opinion of the United States Government. It is not clear, however, particularly from Senator Vandenberg’s remarks⁴² in the recent debate in the United States Senate, whether the United States Government may not have already decided that all deliveries to the Soviet Union from the United States Zone should cease.

Whilst Mr. Bevin entirely appreciates the strength of feeling on the subject in the Congress and understands the necessity of the United States Government’s paying full attention to this feeling, he cannot help wondering whether the full implications of a policy of terminating reparations deliveries to the Soviet Union have been realised and the complications which such a policy would be likely to cause in our relations not only with the Soviet Union but with the I.A.R.A. powers.

In addition to the general arguments used by Mr. Bevin against taking a step which the Soviet Union will almost inevitably regard as marking the final breach between West and East Germany and the undesirability of departing from the Potsdam decisions, Mr. Bevin has instructed me to mention the following further points which, in his view, should be taken carefully into consideration:

(i) Of the 25 per cent share in reparations allocated to the Soviet Union, 15 per cent is in return for reciprocal deliveries from the Soviet Union. These are now being made. On receipt, these reciprocal deliveries are turned over to the I.A.R.A. powers, including the United States, the United Kingdom, and France. If all deliveries to the Soviet Union are to be stopped it is certain that the Soviet Union will stop making these reciprocal deliveries. This will inevitably cause the United States and the United Kingdom great difficulties with the I.A.R.A. powers, who will thus be deprived of part of their share of reparations. The I.A.R.A. powers, whose friendly cooperation is very necessary for the success of the European Recovery Plan, are already disappointed at the smallness of the reparations programme as a whole, and they will greatly resent any unilateral action by the United States and the United Kingdom calculated still further to reduce the reparations accruing to them. This is especially so as some of them will have been counting on these reciprocal deliveries from the Soviet Union of scarce commodities, such as timber and wheat as a means of helping their own economic recovery. Furthermore, if reciprocal deliveries are stopped, it will no longer be possible for the occupying powers to make use of their share or part of it for the benefit of the German economy.

(ii) It is most desirable to do everything possible to stimulate trade between Western Germany and the Soviet Zone. The cutting off of reparations deliveries to the Soviet Union would have just the reverse effect.

(iii) It is undesirable to take any action which might give the Soviet Union an excuse for making the Allies’ position in Berlin, which they are already attacking, even more difficult; or so prejudice the chances of maintaining in existence the quadripartite machinery, one of whose main functions in future could be reparations allocations.

(iv) If none of the dismantled plants is to go to the Soviet Union, the opposition of the German Communists to the reparations plan as a whole is likely to be greatly increased and the task of the Anglo-American authorities in enforcing it made correspondingly harder, especially in the British Zone where the major problem arises.

(v) It has frequently been suggested that the United States’ intention is to suspend deliveries not only to the Soviet Union (and Poland) but to Yugoslavia, Czechoslovakia, and Albania. This would constitute a definite breach of the Paris Act on Reparations. Although the stoppage of deliveries to Russia might be justified on account of Soviet failure to observe the Potsdam decisions, this argument could not apply to these other countries and it would be difficult to justify depriving them of reparations.

(vi) It is clear in the view of His Majesty’s Government that Category 1 war plants should be completely dismantled and removed physically from Germany.

(vii) It has been suggested that all the reparations procedure might be carried out up to and including the dismantling and packing stages, the material then being stored in Germany. Whilst such an arrangement would clearly be much better than suspending reparations procedure altogether and leaving the plant allocated to the Soviet Union un-dismantled, it would inevitably encounter many difficulties in respect of storage accommodation and provision of guards.

Washington, 27th December, 1947.

40. Delivered on December 29, 1947; see the memorandum of conversation by Acting Secretary Lovett, infra.
41. For the record of Secretary Marshall’s conversation with Foreign Secretary Bevin on December 17, see p. 815.
42. For the statement on reparations by Foreign Secretary Bevin, intended for delivery to the Fifth Session of the Council of Foreign Ministers, London, November 25–Deeember 15, 1947, but not made and subsequently published in the press, see Documents on International Affairs, 1947–1948, pp. 522–527.
42. Reference is to a statement by Senator Vandenberg to the Senate on December 19 on the question of reparations; regarding the Senator’s statement, see the memorandum of conversation by Lovett, infra.