862.60/4–3048
Memorandum by the Assistant Secretary of State for Occupied Areas (Saltzman) to the Secretary of State
Subject: Deliveries of German Reparations to Soviet Satellites
It is believed that you should be apprised of a disagreement of policy between the State Department and Army on the above subject. Secretary Royall may have occasion to initiate discussion on it prior to completion of our work.
Subsequent to the Czechoslovak coup, General Clay suspended deliveries from the U.S. Zone of capital equipment allocated by IARA to Czechoslovakia, Yugoslavia, and Albania. All such equipment in process of delivery is from German war plants. The United States had originally concurred in the allocation of this equipment. As grounds for his action General Clay points to the war potential of the equipment and the plants from which it has been removed.
Our initial proposal to the Department of the Army was that partial deliveries of allocated equipment be made after screening against a list of prohibited types. Under Secretary Draper protested, first that the procedure borders on the impractical; second, that denial of any types of equipment will reveal our intent; and finally that delivery of any equipment from war plants, even though non-prohibited [Page 752] types of equipment, would be indefensible before Congress.
Because of our commitments through IARA and of the difficulty of dealing differently with the satellite countries as against other IARA countries, with respect to a complete suspension of deliveries, the State Department policy looks to a continuation of partial deliveries. Such a policy will be consistent with the Cabinet decision to preserve the advantages of East–West trade and deny satellite countries only items of strategic or critical importance to their economies.1
We are at present reviewing detailed lists of allocated equipment available here in Washington to determine the possibility of using the proposed type of screening. We hope in so doing to convince the Army of its feasibility and to offer them a definitive pattern through which deliveries of non-prohibited equipment can be made. We further propose to negotiate with the British and French to adopt a similar policy looking to restriction of all deliveries, whether trade, restitution or reparations, to non-prohibited items of equipment.