701.6111/12–1847
Memorandum by the Deputy Director of the Office of European Affairs (Thompson)1
While it is not customary to discuss matters of current business during the initial courtesy visits of new ambassadors, it is possible that in view of Ambassador Panyushkin’s2 frank talk with Ambassador Smith before his departure from Moscow, he will be disposed to go beyond the usual limits. If this should occur, it is suggested that [Page 642] you refer to the cooperative attitude which the Department takes toward the Soviet Embassy here and its problems, and inform the Ambassador that this Government feels that such matters should be kept on a reciprocal basis. You might then mention in general terms four matters which are currently plaguing our Embassy in Moscow and making its operation more difficult.
1. Lack of Adequate Housing Facilities.
Ever since the end of the war the Embassy has been endeavoring to obtain from the Soviet Government, which controls all housing in Moscow, additional facilities in order to accommodate more adequately the offices and personnel of the Embassy.3 To date all the efforts of the Embassy in this direction have been without avail.
2. Import Restrictions.
In August 1947 a new customs procedure applicable to diplomatic missions was introduced in the Soviet Union which limits to 900,000 rubles per annum the exemption from customs duties on goods imported for the use of the Embassy and members of its staff. Goods imported after this quota has been exhausted are subject to duty. Duty charges are exorbitant and onerous and the quota was practically exhausted after one shipment of official supplies for the Embassy had been cleared. The operation of the Embassy requires that substantial imports of foodstuffs and other supplies be made periodically. The Embassy has protested vigorously against the application of this procedure and Ambassador Smith has already indicated to Molotov that unless measures are taken to revise the procedure so that supplies necessary for the operation of the Embassy can be imported duty free, counter measures will have to be taken by this Government.
3. Conversion of Embassy Funds.
The Embassy has been informed that under the new conversion regulations it must convert all rubles on hand at the rate of 10 old rubles to 1 new ruble. The rubles on hand at the Embassy represent the proceeds from dollar funds converted into rubles to meet the Embassy’s normal operating expenses and the proceeds from sales of the Russian-language magazine Amerika. In view of the fact that the official dollar value of the ruble has not changed, we feel that there is no justification in enforcing such an unfavorable rate for the conversion of these funds and that the conversion should be effected at parity.
4. Revision of Diplomatic Exchange Rate.
Following the announcement of the conversion regulations and the new price levels, diplomatic missions in Moscow were informed that [Page 643] the old diplomatic rate of 12 rubles to the dollar had been changed to 8 rubles to the dollar. There is no reason for supposing, on the basis of information to date, that a corresponding reduction in the operating expenditures of the Embassy will occur. We feel that the rate of 8 rubles to the dollar is both unrealistic and unfair and that the Soviet Government should be prepared to discuss with the diplomatic corps the establishment of a more equitable rate.
- This memorandum was directed to Under Secretary of State Robert A. Lovett.↩
- The appointment of Alexander Semenovich Panyushkin as Ambassador of the Soviet Union to the United States had been announced in the Soviet press on October 25. He presented his credentials to President Truman on December 31. He had been Ambassador to China between 1939 and 1944, and then was a Far Eastern expert in the People’s Commissariat (subsequently Ministry) of Foreign Affairs. He had graduated from the Frunze Military Academy in 1938, and had reached the rank of Major General during his military career. He was believed to have attained considerable influence within the Communist party.↩
- For earlier documentation on the attempts to obtain better Embassy and living accommodations, see Foreign Relations, 1946, vol. vi, pp. 752–754, and footnote 94.↩