740.00119 Council/5–1248: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

top secret   us urgent

2062. For Lovett’s Eyes Only from Douglas. Clay and Murphy returned from Berlin today when I discussed with both the language suggested in Delsec 1727, May 10,1 in connection with the paper on the international control of the Ruhr.

Clay and Murphy are vigorously opposed to the provision which requires the International Authority, during the existence of ECA and the OEEC, to make the division of coal, coke and steel in accordance with approved OEEC programs for the recovery of the participating countries, for the asserted reason that it relinquishes the US authority to exercise a dominant voice in regard to bizonal foreign trade.

The procedure which would be followed under the language to which Clay and Murphy take exception would be about as follows: The OEEC would prepare a program for the recovery of the participating countries into which Ruhr coal, coke and steel if any, for export would be fitted. Germany would be represented in the formulation of such a program. The vote for the bizonal area in OEEC in respect of all matters affecting foreign trade, including the export of coal, coke and steel if any, would be subject to the provisions of the Bizonal Fusion Agreement2 and JEIA subsequently be submitted to Washington where, in accordance with the procedure which I understand will be followed, it would be approved or modified by the Administrator3 at least as to the features of such programs which are associated with the expenditure of ECA funds. Thus in the first instance, the dominant voice of the US, through the Military Governor, would be expressed in the formulation of the program, and, in the instance, the approval of the US would be had through the action of the Administrator.

In event Administrator’s approval to the program, et cetera, is not required, Clay, being party to OEEC Charter and committed to participating in the formulation of such programs under Article 3, part I and other articles of the OEEC Charter, will have a dominant voice since: (a) Under Article 14 of part II of the Charter, decisions except in special cases must be made by mutual agreement; and (b) since in all matters affecting bizonal foreign trade US views are controlling.

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When the substance of this procedure was explained to Clay and Murphy, the grounds for their objections were shifted; first, to the language of Article 14 of part II of the OEEC Charter under which that organization might make an exception in special cases so as to preclude bizonal representation from participating in the formulation of programs, thereby relinquishing US Military Governor’s control; and second, to the fact that the proposed language would, if Administrator’s approval is required, shift the final responsibility from the Military Governor in Germany to the Administrator.

As to the first point, it is not likely that the OEEC would invoke Article 14 of part II of the Charter to prevent bizonal area from participating in a program involving coal, coke and steel if any, for export to the other participating countries. It was not intended and can hardly be invoked for this purpose since determination of special cases must be by mutual agreement.

As to the second point, the language suggested in the third paragraph of Delsec 1727, May 10, provides that the Military Governors will proceed with the implementation of the findings of the international authority, subject to the terms of any agreements in regard to the extension of financial assistance to Germany which are now in existence or which may in the future be made; i.e., the present bizonal fusion agreement or any extension or modification thereof, or any trizonal agreement.

It is significant to point out that while the international control authority during the life of ECA, et cetera, must make allocations in accordance with approved OEEC programs, the Military Governors implement in accordance with the terms of any such financial agreement. This, it seems to me, protects the financial position of the US in any implementation of the findings made by the international control authority and submitted to the Military Governors in any circumstances and in all events, whether an OEEC program involving the export of coal, coke and steel if any, from Germany has been or has not been approved.

While Clay is disposed to concede that this is correct, he objects to it on the grounds that it might precipitate a conflict between the Administrator on the one hand and the Department of the Army or the Military Governor on the other. If, therefore, one examines Clay’s objections carefully, one finds it difficult to escape from the conclusion that his objection is not that the proposed language does not protect the financial interests of the US, but that it may on the one hand cause a conflict between him and the Administrator, or, on the other hand, shift the ultimate responsibility from him, as Military Governor, to the Administrator.

I do not have any pride of authorship in the language which has [Page 237] been suggested and have no doubt that it should be modified, but there is, it seems to me, much merit in the substance of the suggestion.

First, as to the authority of the international control board to allocate, in accordance with approved OEEC programs:

This seems to me to be a clear evidence that the US, through its position of responsibility in Germany, is prepared to do, in respect of the OEEC organization, precisely what we are suggesting that other countries do; namely, to play a part in the preparation of joint programs for the recovery of the participating countries. If we are not prepared to do this much, how can we expect other participating countries to do it?
It has the effect of reducing the appearance, though not the fact, of US dominance to which I sense among the British, French and Benelux countries a growing apprehension and which the Communists will promptly use to confirm their previous assertions that the Ruhr has been turned over to American capitalists.

Second, as to the language which authorizes the Military Governors to implement the findings of the international control authority subject to the terms of any existing or future agreement regarding the extension of financial assistance to Germany; it seems to me that the US position is protected under all circumstances and in any event, and that it combines the US financial responsibility in Western Europe as a whole with our financial responsibility in Germany.

Clay at the moment is violently opposed to the proposal, particularly in regard to the OEEC, and is so advising the Department of the Army.

If you approve of the substance, however inadequately expressed in the language which I have suggested, I will continue to try to persuade Clay to go along.

While the content of the idea has not been formally presented to other delegations, a purely personal and informal discussion, which involved no commitment whatever, indicates that it will break the deadlock and result in agreement.

Would appreciate your advice.

Can you find any bug in this potato?

  1. Not printed.
  2. The U.S.–U K. Bizonal Fusion Agreement of December 2, 1946 as amended December 17, 1947; for texts, see Germany 1947–1949, pp. 450–460.
  3. The Administrator of the European Cooperation Administration.