740.00119 EW/7–1448
The Head of the German General Economic Department of
the British Foreign Office (Haviland) to the Counselor of the Embassy in the United
Kingdom (Keith)1
secret
London, 10th July,
1948.
CJ.3010/93/182
Dear Keith: I attach for your records a copy of the
instruction with regard to the resumption of a revised reparations
procedure which our Governments agreed for issue to the three Military
Governors concerned.
2. We subsequently agreed that these instructions should be modified to
take account of the then situation in Berlin, and that the Military
Governors should be instructed:—
- (i)
- The list of plants selected on behalf of IARA should be notified to the
Agency forthwith, but that no reference should be made in this
communication to our proposed method of disposing of the Soviet
share.
- (ii)
- No public announcement of any kind should be made at present
with regard to the revised reparations procedure.
- (iii)
- The letter of notification to the Soviet Commander-in-Chief
should not be dispatched.
- (iv)
- If the Soviet Commander in Chief were to make enquiries about
the making available of equipment to I.A.R.A., or the disposal
[Page 771]
of the Soviet share, or lodge a formal
protest with regard to our action, he should be told that no
equipment can be made available to the U.S.S.R. until
arrangements have been made for the free flow of traffic between
the Western Zones and Berlin and the Eastern Zone.
3. We later agreed that in answer to enquiries by the Press or others as
to how we proposed to deal with the share of reparations to which the
U.S.S.R. is entitled under the Potsdam Agreement we should reply as
follows:—
“No equipment can be made available to the U.S.S.R. until
arrangements have been made for the free flow of traffic between
the Western Zones and Berlin. As soon as satisfactory
arrangements have been agreed we shall be prepared to discuss
the question of making equipment available to the U.S.S.R.”
4. We have since informed you that we were answering other Press
enquiries in the following manner:—
- (a)
-
What authority is allocating equipment as
reparations?
The need for making equipment available and thus progressing
with the reparations programme has been urgent. In
consequence it has been decided that the British Zone
Commander shall informally make equipment scheduled for
reparations, under the Anglo-American Level of Industry
Plan, available to I.A.R.A.
- (b)
-
How many plants are being made available
and what is their value? (Figures applicable to
British Zone only.)
Notified to I.A.R.A. for
allocation.
(If asked we will give details of particular plants
affected.)
73 whole or part plants valued at 97.3 million Reichsmarks
(1938).
- (c)
-
Will further equipment be made available
as reparations?
Yes, as soon as possible.
- (d)
-
What action is being taken by the French and
United States Zone Commanders?
They are acting in a similar informal manner, but we have no details of
the number of plants being made available by them or of their value.
5. I should be glad of your confirmation that the above sets out
correctly the understanding of your Government with regard to our
agreements.2
Yours sincerely,
[Page 772]
[Enclosure]
Instructions From the Governments of the United States, the United Kingdom, and
France to Their Military
Governors in Germany3
Subject: Resumption of Reparations
Part I. Following instructions with respect to resumption of
reparations have been approved by the Governments of the United
States, United Kingdom and France and constitute instructions to you
from your Government:
- 1.
- In further discussions through the diplomatic channel
between representatives of the Governments of the United
States, the United Kingdom and France, an agreed procedure
for making reparations available from the three Western
Zones has been worked out as a means of overcoming the
present deadlock resulting from the fact that the
quadripartite allocating machinery is presently inoperative.
It will be put into operation urgently in order speedily to
complete the reparations programme.
- 2.
- Action will be taken by the three Commanders-in-Chief of
the Western Zones, each acting with respect to the capital
equipment in his own Zone, but in consultation with his two
colleagues on the basis of existing reparations lists (but
see paragraph 3 below). Each will be responsible for making
a division of capital equipment for reparations as between
the Inter-Allied Reparations Agency and the Union of Soviet
Socialist Republics, 75% in each broad industrial category
declared for reparations being made available to the
Inter-Allied Reparations Agency and 25% in each broad
industrial category being provisionally selected and held
for future delivery to the Union of Soviet Socialist
Republics. Of the 25%, 15% will be-delivered to the Union of
Soviet Socialist Republics against a Soviet undertaking to
supply to the Western Zone Commanders reciprocal deliveries
to an equivalent value over an agreed period of time
corresponding to the delivery of capital equipment. Without
prejudice to action under the foregoing sentence,
discussions will shortly be held among the three Western
Occupying Powers to determine whether past deliveries of the
15% share of capital equipment to the Union of Soviet
Socialist Republics which have not been matched by
reciprocal deliveries equivalent in value from the Union of
Soviet Socialist Republics will affect the quantity and
timing of future reciprocal deliveries. The disposition of
the remaining 10% will also be the subject of further
discussion between the three Western Powers
concerned.
- 3.
- The list of equipment to which this procedure will
immediately apply is governed by the following factors:
- (a)
- A number of plants on the existing reparations
lists are still under examination by the United
States Government with a view to their possible
retention in Germany in the interests of the
European Recovery Programme. The United States
Government, however, will in the very near future
supply an initial list of plants which have been
excluded from such examination and additional lists
of similar exclusions will be supplied from time to
time and as soon as possible.
- (b)
- The question of the application of the principle
of paragraph 117D of the Foreign Assistance Act of
1948 to the delivery of equipment for reparations is
under consideration. This consideration is not
likely to be completed in time to be taken into
account when the first division of equipment is made
by the Military Governors. Meanwhile, the general
principle of the paragraph in question is to be
borne in mind.
- 4.
- You should accordingly proceed on the basis of the list of
capital equipment excluded from examination by the United
States Government (3(a) above),
contriving as far as possible to avoid the selection for the
Union of Soviet Socialist Republics of plants which have an
obvious war potential. You should report urgently, after
consultation with your colleagues, as to when you think this
work will be completed as regards the initial selection of
plants. At an agreed date, which will have to be fixed after
consultation between Governments in the light of your reply,
you will then proceed separately but concurrently:
- (i)
- To notify the Inter Allied Reparations Agency of
the assets made available to it for reparations in
this initial selection, with a request to allocate
such assets as soon as possible.
- (ii)
- To notify the Soviet Commander in Chief of the
action which is being taken. The terms of this
communication are now under consideration between
the three Governments and will be transmitted to you
shortly for your consideration.
- 5.
- You should proceed in conformity with the relevant
provisions of the preceding paragraphs to make additional
divisions of reparations as promptly as circumstances
permit.
- 6.
- You should quickly dismantle all equipment made available
to the Inter Allied Reparations Agency within your Zone.
Equipment selected for the Union of Soviet Socialist
Republics may be dismantled or left standing at your
administrative convenience pending agreement with the Soviet
Commander in Chief as to its disposal.
- 7.
- You should cooperate with your (United States, United
Kingdom or French as the case may be) colleagues in
enforcing whatever priority in the allocation of materials
or services may be necessary to the smooth and speedy
execution of the reparations programmes in the three Western
Zones.
- 8.
- You will be responsible for arranging delivery to the
recipient countries in conformity with the allocations made
in due course by the Inter-Allied Reparations Agency.
- 9.
- You should consult with your colleagues as to any special
steps for presenting the above procedure to the German
people and, if these are deemed necessary, agree upon the
required steps.
Part II. Following is text of agreed explanatory minute concerning
paragraph 2 of above instructions. Although not included among your
instructions, it is an integral part of the understanding between
the three Governments concerned:
- 1.
- By consultation is meant that, within the framework of
these instructions and in particular as regards paragraph 4,
the Military Governors shall be in agreement as to uniform
procedures for notification to the Union of Soviet Socialist
Republics and the Inter Allied Reparations Agency. Pending
agreement on the question referred to in paragraph 3(b), the above interpretation shall
also be applied to the selection of equipment for the Inter
Allied Reparations Agency and for the Union of Soviet
Socialist Republics, prior to final action by each of the
three Military Governors. Nothing in the foregoing shall be
construed as meaning that consultation between the three
Military Governors shall not be required after agreement has
been had on the question referred to in the said paragraph
3(b).
- 2.
- It is agreed that no action shall be taken in regard to
the two matters referred to in the last two sentences of
paragraph 2 of Part I until agreement on these two matters
has been reached; provided that, if, at the expiration of
six months, no agreement has been negotiated, each Military
Governor may in respect of these two matters act
independently.
