711.60F/7–2247: Telegram

The Ambassador in Czechoslovakia (Steinhardt) to the Secretary of State


946. Department doubtless re-examining its policy towards Czechoslovakia in light of events of past fortnight. Following comments are submitted with a view to assisting Department in its review.

Situation within Czechoslovakia has not thus far changed as radically as world press has represented. What has happened is that a condition believed by well-informed to have long existed has been removed from realm of doubt of irrefutable evidence and publicly disclosed. As this Embassy’s reports have often pointed out, Soviet control of Czech foreign policy since end of war has been substantially complete. Recent events have merely demonstrated fact dramatically. At present important questions, to which answers will probably be provided within next few months, are whether Soviets, because of growing tension between east and west and by reason of Czechoslovakia’s gesture of independence in accepting Paris invitation, will feel constrained (1) further to curtail economic and other contacts with west which Czechoslovakia has heretofore been permitted to maintain and (2) materially to strengthen control of Communist Party over Czech internal affairs and within government. I am of opinion that for time being Soviets will be more likely to move in direction suggested under (2) than in that suggested under (1). As long as Czechoslovakia is prevented from establishing relations with west commensurate with rights of a sovereign government, meaning relations which could have a real political significance, it definitely in interest of Soviet Union that Czechoslovakia continue to obtain raw materials from west in quantities adequate to prevent collapse of Communist-sponsored 2-year plan and sufficient to permit Czechoslovakia to meet its extensive economic commitments to Soviet Union and its satellite countries. It also definitely in interest of Soviet Union that there should not be disclosed to Czech public or to public of other satellite countries any failure [Page 224] on part of Soviet Union to make good its economic commitments to Czechoslovakia, unquestionably granted to soften impact of compulsory withdrawal attendance at Paris Conference. Continued substantial economic relations by Czechoslovakia with the west would constitute insurance against a noticeable deterioration in the economy of Czechoslovakia that might otherwise result from failure of Soviet Union to meet its commitments.

In my opinion our policy toward Czechoslovakia should, therefore, be one which

Avoids making any contribution towards protecting the economy of Czechoslovakia from deterioration, as long as Government of Czechoslovakia continues to permit itself to be used as an instrument of Soviet policy, and continues to stake the maintenance and improvements of the country’s economy on Soviet promises to deliver necessary raw materials and
Provides the maximum encouragement to the moderate Czech leaders to resist further Communist domination and to recover lost ground. Such a policy should not be too difficult to formulate if it rests on premise that every effort will be made to evidence friendliness towards Czechoslovakia but that nothing will be done to aid economy of country until Czech Government has felt impact of its reliance on Soviet Union and its satellites for continued maintenance of its complicated industry and high standard of living. It is my considered judgment that, until Czech Government becomes convinced that the economy of Czechoslovakia cannot be reoriented over night from west to east, as they are now seeking to do, without industrial stagnation and a resultant public outcry, wiser counsels will not prevail. My recommendation in the economic field is that while no attempt should be made to discourage normal flow of trade between US and Czechoslovakia on a cash basis US should extend no substantial public or private loans or credits to Czechoslovakia. To extend substantial loans or credits would merely be to assist in overcoming economic bottlenecks and in bolstering the weak spots in Czech economy, which will otherwise undoubtedly develop in near future, this cancelling out probable failure of Soviet Union and its satellites to meet their economic commitments. We should not permit ourselves to be used to conceal fissures in Czech economy as they develop as result of Soviet failure deliver promised material.

In connection with foregoing it important to bear in mind Czechoslovakia is only country among Soviet satellites which is so highly industrialized and so dependent on imports of raw materials from west as to be a quiet example to other Soviet satellites of consequences of relying exclusively on Soviet promises of economic assistance. If Department desires to demonstrate to all of Soviet satellites danger of tying their economies exclusively to Soviet Union and to one another Czechoslovakia probably only country among them where quick results might be expected and where, at same time, sufficient freedom of [Page 225] expression exists to have condition publicly avowed and brought to attention of world press.

Policy which I have recommended above is not suggested as a sanction against Czechs for action taken by them only under extreme pressure but in conviction that Communist leaders in Czechoslovakia Government will not agree with moderate leaders to renewal of full economic collaboration by Czechoslovakia with west until it has been unmistakably demonstrated that without such collaboration Czech industry will be threatened with collapse. I am convinced that refusal of economic assistance to Czechoslovakia by west would demonstrate within less than 1 year that Czech industry cannot function effectively) without extensive imports from west, thus strengthening position of moderate leaders in Czech Government, who have long been advancing this argument and who repeated it to Stalin last week. On other hand extension of substantial public or private loans or credits by US to Czechoslovakia would enable Czech Communist leaders to have their cake and eat it too by carrying forward their foreign policy in the interest of Soviet Union, while at same time making use of American) loans and credits to build up Czech economy for benefit of Soviet Union and its other satellites. In order avoid giving offense to and discouraging vast majority of Czech public who are anti-Communist and their leaders in and out of government it would seem undesirable explicitly to refuse loans or credits. Such refusals would be played up by Communist press as indicating unfriendliness on part of US, a lack of understanding of Czech position and an unwillingness to extend loans or credits without imposing political conditions. Rather than explicitly refusing loans or credits, I recommend a disinclination to discuss them and should discussion be forced upon American representatives that they take matter under advisement and postpone action indefinitely.

Along with above, it seems to me desirable that our policy towards Czechoslovakia should not be exclusively negative. As Department aware, there [are] strong elements in country of pro-western orientation. The vast majority of Czech and Slovak people definitely resent Soviet domination. It is obviously in our interest that these elements should continue to oppose infiltration of Communism plus Soviet totalitarianism. It is equally obvious that without some encouragement from US it is questionable how long they will continue to offer real opposition. To meet problem of devisable form of encouragement to Czech moderates, which on one hand will not prove of equal or greater advantage to Communists, and on other hand will not be merely verbal and ineffective, the three following immediate possibilities are suggested:

That we propose to Czechs as soon as possible conclusion of a cultural convention along lines of recently concluded Anglo-Czech [Page 226] convention told in my despatch 2738, June 27.1 While such a convention might have little practical significance it would nevertheless, if undertaken promptly and publicly announced, be taken by Czech public and moderate leaders as evidence that US has not abandoned Czechoslovakia to Soviet Union and hence would have an important psychological and perhaps even political effect.
That Department urge upon War Department for political reasons adoption of a conciliatory attitude in forthcoming negotiations (July 24) with Czechs on dollar charges for transit of Czech exports and imports across Anglo-US zones of Germany. A continuation of severe policy in this matter would be looked upon by Czechs of all political parties as a measure of economic blockade by west and would tend to convince many who are friendly to US that Czechoslovakia has no alternative than to rely economically on Soviet Union.
That Department resolve in affirmative its consideration as to whether Hungarian coup d’état should or should not be brought before UN Assembly at forthcoming session. I believe that an airing of this matter in Assembly which could hardly be concealed from Czech public would have effect of convincing many Czechs that fate of eastern European countries continues a matter of concern to the US and that American Government has no intention of limiting its concern to mere notes to offending governments. Irrespective of outcome of debates in Assembly a vigorous presentation by US of its position might well have effect of inducing Czech Communist leaders to proceed in Czechoslovakia with greater caution than they might otherwise be disposed to do.

  1. Not printed. The United Kingdom-Czechoslovak convention under reference was concluded on June 16.