Foreign Relations of the United States, 1947, Eastern Europe; The Soviet Union, Volume IV

740.00119 Control (Germany)/3–1047: Telegram

The Acting Secretary of State to the United States Political Adviser for Germany ( Murphy ), at Berlin

secret

Washington , March 25, 1947—7 p. m.

646. Personal from Acheson. I am concerned by problems raised urtel 598 Mar 10¹ concerning payment in dollars by Czechs for transit charges across Germany. Lack of any satisfactory agreement in protracted negotiations on this subject will give Czechs an opportunity to turn a technical question into a diplomatic and political issue involving overall problem Czech relations with US and Western states. Discussions with US liaison officer to ECITO and MEA representatives in London indicate that unless satisfactory arrangement is worked out Czechs will continue their efforts to broaden field of negotiations by ultimate appeal to international organizations.

I do not consider Czechs are deliberately attempting effect payment transit charges in a manner designed to cause greater expenditure US funds in Germany, but that their tactics are based both on political considerations and their own lack foreign exchange resources. Their acute shortage dollars is reflected not only in negotiations on transit charges, but in all Czech economic questions coming to attention Dept. It is also borne out in negotiations on other unsettled questions between US and Czecho which involve dollar payments.

I concur that settlement of transit question should not be used to provide an indirect subsidy Czech economy but wish to point out that lack of agreement is having serious repercussions in our diplomatic relations and in time will probably become a political issue within Czecho between Moderate and Communist elements. The coincidence of operational difficulties in German ports reported in CC 8258 Mar 5² and discussions on coal procurement and payments in CC 8310 Mar 10² with Czech negotiations for a Polish agreement raises question entire orientation Czech policy as well as our own objective in maintaining contact between Czecho and Western states. Intelligence reports were that sole argument used by Sov representative to Czech For Min in requesting conclusion Czech-Polish treaty was reference to American transit charges in Germany. It is desirable that Czecho continue to trade with West and ship goods across bizonal area rather than concentrating on transportation facilities in Soviet zone and Polish ports. I note in this regard that 60 of 90 trains from Hamburg during Mar will be through Soviet zone. Czech transit trade through bizonal area must be continued unless we wish to acknowledge that Czecho is to be completely dependent on Eastern Europe for its foreign trade facilitites.

I hope that upon Colonel Palecek’s³ return to Berlin (CC 8341 Mar 12⁴) ensuing negotiations will take into account necessities imposed on Czecho by reason its geographic location as well as preferential position it occupied in transportation and port system of Weimar Republic. Maintenance of principles underlying historic ties between Czecho and West is important in furthering our current diplomatic policy. I recognize that adjustments must be made in adapting historic relations between Czecho and Central European transportation system to current budgetary requirements and to principles adopted in quadripartite agreements. I trust, however, that all possible ways will be examined to offset required payments and to enable Czechs, with their depleted dollar resources, to continue and to develop their transit trade with West.⁵

Sent to Berlin as 646; repeated to London as 1325; to Paris as 1097; to Praha as 260; and to Moscow as 658 Moskco 28 for Murphy.

Acheson

1. At the beginning of 1947, negotiations were held in Berlin between Czechoslovak officials and American occupation authorities regarding revised economic arrangements between the Czechoslovak Government and the recently combined United States and British zones of occupation. The principal point at issue in these negotiations was the manner of payment for Czechoslovak freight traffic across the American and British zones of occupation. Telegram 598, March 10, from Berlin, not printed, reported that American occupation authorities continued to adhere to their position that Czechoslovakia make such payment in dollars (740.00119 Control (Germany)/3–1047).
2. Not printed.
2. Not printed.
3. General Palaček, the Chief of the Czechoslovak Military Mission to the Allied Control Authority for Germany, who was replaced at the beginning of April by Gen. František Dastich.
4. Not printed.
5. Following discussions between Ambassador Steinhardt and General Clay and his advisers in Berlin at the beginning of May, negotiations were begun in Praha with Czechoslovak authorities for the final settlement of past and future transit charges for Czechoslovak freight crossing the United States zone of occupation in Germany. In June agreement was reached under which the Czechoslovak Government was to pay $5,000,000 for the final settlement of all transit charges for transportation services through the American zone from the end of the war to March 1, 1947. The settlement for subsequent transit charges was worked out in connection with the agreement on trade and commercial relations between the joint United States-United Kingdom zones of occupation and Czechoslovakia which was signed in Praha on July 29, 1947.