Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Control (Germany)/8–348: Telegram

The Ambassador in the Soviet Union (Smith) to the Secretary of State

top secret   us urgent
niact

Moscow, August 3, 1948—3 p. m.

1508. To Department Eyes Only for the Secretary. Following précis of conversation¹ is from notes made by English and French interpreters and is accurate summary:

US Ambassador opened by saying that he wished to make very frank and complete statement of the position of the three governments in the light of the Soviet note of July 14,² and as the senior representative he was authorized to speak for all of us. After making the agreed statement,³ he asked Stalin to explain his position and state the Soviet view.

Stalin’s first response was to ask whether we had authority to open negotiations. The US Ambassador replied that we were not there to negotiate, but to attempt to work out a formula which might lead to negotiations. If, as we hoped, the Soviet Government shared our desire to reach a solution, we were there to discuss practical measures to that end.

Stalin said that, assuming we could settle the most acute questions concerning Berlin, were we prepared to discuss question of Germany as a whole? The US Ambassador replied that we had no authority to commit our Governments to specific proposals, but were interested in learning Stalin views on the possible basis of a settlement.

Stalin, after pointing out that the meeting was an unusual one with the representatives of three powers present, set forth his views on the following lines. The restrictive transport measures undertaken by the Soviet authorities had been caused (1) by technical reasons, (2) because large quantities of equipment were moving westwards from Berlin, and (3) because the London decisions, and more especially the currency reform and introduction of western zone currency into Berlin at the center of the Soviet occupation zone, had disrupted the economy of that zone. The Soviet authorities were defending the Soviet zone.

As long as we have treated Germany as a whole, the presence of allied occupation troops in Berlin, as the capital, is natural; but geographically Berlin was center of Soviet zone. As a result of the London Conference, a separate state had been created in western Germany with its capital at Frankfurt. Two capitals now existed, and as a result of these recent changes the right of the western powers to maintain troops in Berlin had lost its juridical basis. It was in this sense that the relevant passage of the Soviet note of July 14 should be understood. If there were two states in Germany, Berlin could not be regarded as the capital of the whole of Germany. Stalin then stated most emphatically that this did not, however, mean that the restrictive measures employed by the Soviet authorities were intended to oust the allied troops from Berlin. Even if the allies failed to reach agreement on the future of Germany, and even if Berlin were supplied exclusively by the Soviet Government, there was still no intention on the Soviet part of ousting allied forces from Berlin. He had, however, wanted to bring out the juridical position as the Soviet Government saw it. He repeated that all the restrictive measures adopted by the Soviet authorities had been to prevent the invasion of the Soviet zone by the special western currency, and resulted from the tactics of the three powers at the London Conference.

The allies were not entitled to claim that it was impossible to discuss the German question while measures of duress were employed. The present situation was that there was a separate currency in western and eastern Germany. He then argued that there was a third in Berlin, which made economic nonsense. In this respect Berlin, which was in the middle of the Soviet zone, could not be cut off from it, and a special currency there could not be tolerated. He therefore proposed to abolish any special Berlin currency while leaving separate currencies in western and eastern Germany until other matters in dispute could be settled.

The US Ambassador thanked Stalin for his explanation and said he appreciated Stalin’s position. The fact was, however, that there were diametrically opposite views on these problems. For years past the two sides had been getting further apart; it was time to review the whole problem and see if we could get together again. We were not authorized to accept any specific proposal, but should like to know if the Generalissimo was implying that we might expect the opening of communications simultaneously with the abolition of the separate currency in Berlin and the possibility of further discussions on Germany. Stalin said he had not been correctly understood; he had spoken not only of the special currency in Berlin, but also of the effect of the London decisions which had necessitated restrictive measures. He proposed that the London decisions be suspended until a four-power meeting took place to try to reach agreement. Maybe agreement would be reached, but if the London decisions had already been put into effect, there would be nothing left to discuss. He therefore proposed the temporary suspension of the London decisions, as well as the abolition of special currency in Berlin, simultaneously with the abolition of Soviet restrictive measures.

Mr. Roberts said that he had not felt it necessary to intervene before, but he should perhaps say that he was in general agreement with the presentation of the case by the US Ambassador and he thought that his Government would understand the arguments put forward by Stalin over currency. Although he could not, of course, commit them, he had expressed to Mr. Molotov already that their view was that there should be a progressive solution of the problems, beginning with the most urgent, but of course bringing all the more [important] ones into discussion. We quite understood that the currency question was important to the Soviet Government, just as the question of communications was important to us (Stalin said he quite understood). Then the French Ambassador said that he was in complete agreement and that he thought a basis for discussions had been found. He would inform his Government, with a view to opening discussions soon, but of course with the understanding that currency was to be the starting point.

Stalin said that Mr. Roberts seemed to think that his second point about the London decisions was not urgent. He agreed that certain points in connection with London agreements were not urgent, but he was very interested in one question; he understood that a sort of parliamentary council was to be formed soon, and that this would set up a German Government. If this went ahead, the Soviet Government would be faced with a fait accompli and there would be nothing left to discuss. The US Ambassador said he had not seen the matter in that light. Nothing was being done in the western zones which could not be fitted into a central German Government whenever four-power agreement could be attained. He stated that without wishing to go into the detail, of two years of frustrations and disagreements, the steps taken in the western zones seem to us to be defensive, just as the Soviet Government maintained the steps they were taking were defensive. The important thing was to take stock and to try to get back to some possible basis of understanding and confidence. There were at present two artificial conditions existing which were exerting pressure. On the one side there was the Berlin currency, and on the other side there was the interruption of communications. He had had considerable experience with air supply; it was a big job which we could do, and continue to do indefinitely, but we would rather not have to do it. There was always the danger of collisions, with constantly recurring incidents and increasing tension. We should therefore begin discussions and try to find a basis of understanding. His own suggestion, which he would like to report to his Government, was that there should be simultaneous announcement of resumption of negotiations on Berlin, a four-power meeting to consider other outstanding problems affecting Germany, and broader questions within the agreed competence of the four powers, together with the reopening of communications between Berlin and the western zones; and, further, an agreed solution of the Berlin currency problem. He would recommend that a solution should be reached immediately of the artificial currency situation in Berlin, and afterwards he hoped that discussions would develop to deal with the other outstanding questions, and so prevent us from drawing further and further apart. (This followed the line of the agreed instructions.⁴)

He said his instructions did not, however, go so far as this, and asked his colleagues what their views were. The French Ambassador said he was in the same position, but he would take the responsibility of recommending such a solution to his Government. Mr. Roberts made a similar statement, and added that the tenor of his parting conversation with Mr. Bevin in London made him hopeful of a satisfactory settlement, but he could not commit his Government.

Mr. Molotov then intervened to remind us that Stalin had raised the issue of the London conference decisions, as well as that of the Berlin currency, although the western representatives had not commented on the first point. On the latter point Mr. Molotov was not quite clear as to what the US Ambassador had in mind, but the US Ambassador stated that his recommendation would be that a solution of the Berlin currency problem be found that was acceptable to the Soviet Government. The US Ambassador was not himself an expert on currency matters, and therefore could not discuss this in detail. (The French Ambassador and Mr. Roberts agreed in this.)

The US Ambassador continued that his idea was the discussion of outstanding problems in an atmosphere without restraint and without loss of prestige on either side. A statement of the kind he had indicated, if his Government endorsed it, should produce this result. Speaking frankly, he was fully aware that technical difficulties might come up again if no satisfactory agreement were eventually reached. Stalin then repeated his own proposal, which he was prepared to make in writing, on the following lines:

(1) The simultaneous abolition of restrictive transport measures by the Soviet Military Administration, together with the abolition of special mark—B currency in Berlin, and replacement by Soviet zone Deutsche mark;

(2) Assurance that implementation of London decisions would be suspended until such time as the four powers met (which he understood we had proposed) and try to reach agreement on fundamental questions affecting Germany. (Stalin again said that he was prepared to publish this if we wanted, but readily agreed when we explained that we preferred to keep it confidential for the present.) He emphasized, however, his point about the London decisions.

The US Ambassador said he would, of course, report Stalin’s proposals, but he was not optimistic about his Government’s reaction on this particular point. Without wishing to go into past history, he would remind Stalin of the long and fruitless attempts to reach agreement over Germany. Stalin explained that the only real issue he had in mind was the formation in the western zones of a German Government. He did not mind unification of the three zones, and even considered it progress. The Soviet zone also formed a unity but they had not thought of creating a government there, although we seemed to be pushing him towards it. That was the issue. He understood that the Parliament of the western zones would meet on September 1 to set up a government, and then there would be nothing to discuss. On a question from the American Ambassador, he confirmed that his only objection was the physical establishment of a government in western Germany, because there was still a chance of creating a single government for Germany as a whole when we eventually met, which would automatically solve the Berlin question. If we failed, then clearly the western and eastern zones would drift apart again. He emphasized that he had no wish to embarrass us in connection with the London decisions. The Soviet Government would, however, be embarrassed if a German Government were set up now in the western zones. If we wanted to negotiate we would have to postpone this.

The US Ambassador said he found this very interesting and had not previously considered the problem in that light. He explained that it had never been contemplated that the Government of Frankfurt should be a central German Government but that eventually this government would be able to unite with any government in the eastern zone to form a central German Government. This final step would be the most important subject for discussion at the proposed conference. But the agency now to be set up under the London decisions should in no way hamper eventual understanding. (Mr. Roberts agreed to this.) Stalin said that his understanding was that the object of the meeting this evening was to make possible negotiations to discuss all questions affecting Germany. After disposing of “insignificant conflicts” a meeting should be arranged which might be a Council of Foreign Ministers or some other meeting. If such a meeting took place the Soviet Government would want to put the following questions on the agenda:

(1) Reparations. Only those who wanted them need take them but some countries had suffered very heavily and reparations had an educational as well as material value to discourage countries from aggression.

(2) Demilitarization. This had not yet been completed.

(3) The formation of a German Government. The four powers were under an obligation to set up a single German Government. The Yalta and Potsdam decisions had never spoken of separate governments in Germany. There could not be four governments with four currencies. The Soviet Government had been patient despite the probable formation soon of a western German Government with a separate currency. They had been compelled to establish a separate eastern zone currency but had not yet set up a government in the eastern zone and did not want to be forced to do so. At the proposed meeting the question of a single government would be discussed. If agreement were reached, then the western German Government to be set up in September would be liquidated and it would be better not have created it at all.

(4) Peace treaty.

(5) Control of the Ruhr. Certain unilateral decisions had been reached in London.

If we seriously intended to arrange such a meeting and to secure cooperation then nothing should be done now which might hamper this. Stalin repeated in conclusion that it was not the Soviet purpose to oust the allies from Berlin. He had always been confident that after much skirmishing they could return in the end to a basis for agreement. The US Ambassador said that while it was not impossible that any of the subjects which Stalin mentioned might appear on an agenda, it was quite impossible to consider any agenda at this stage, and while conditions of duress existed. This brought us back to our task of creating a situation in which the conference which we all seemed to be agreed was necessary could take place. But he must repeat in all seriousness that no such discussions could take place unless duress were removed. The issue of the London decisions could only be discussed on a higher level. It would have to be dealt with at the proposed conference. The London conference decisions had not contributed to the state of duress now existing in Berlin and which prevented discussion taking place. The really immediate issues obviously were the blockade and currency.

Stalin suggested that the implementation of the London decisions should be suspended, that mark B should be abolished in Berlin and that then there would be no difficulties. He wondered who was bringing pressure to bear on whom. There was also the issue of the suspension by the western powers of transport to and from the Soviet zone. The US Ambassador said that if this was a means of pressure it might well be removed, but only simultaneously with restoration of normal communications between Berlin and the western zone. Stalin then said that the delay in the establishment of a government in western Germay could be handled confidentially by oral statement which need not be published. If the proposed meeting succeeded, then haste was unnecessary. If not, then we would go ahead. He did not want anyone to be placed in an embarrassing position. There would have been no restrictions if it had not been for the London decisions. The Soviet Government were not seeking conflicts but trying to find a solution.

The US Ambassador said that he would report this to his Government but he thought that the implementation of the London decisions had reached a point at which it would be extremely difficult to hold it up although we would of course be ready to discuss these problems in full detail. (Stalin interjected that he only wanted to hold up the implementation of a part of the London decisions.) Mr. Roberts said that he was not in a position to discuss the London decisions as this was a subject of discussion for the Ministers of Foreign Affairs. This might be a more important but it was certainly a less urgent question. Our immediate aims were less ambitious. We had hoped to create conditions which would lead to full and frank discussion and negotiations. Meanwhile, however, we must reach agreement on the immediate issues of pressure in regard to Berlin. The Soviet Government complained of the pressure of currency and we of pressure over communications. It was not we wanted to settle one set of problems only, leaving the others over, but we thought we should proceed in an orderly and businesslike way to resolve all the problems interesting both parties. (Stalin interjected that Mr. Roberts seemed to be in a hurry.) Mr. Roberts said that whilst he had no desire to delay, he was not in any special hurry and thought all questions should be properly and solidly dealt with. (The US Ambassador interposed that he was as patient as Stalin and that we could of course go on indefinitely.)

The French Ambassador said that he hoped that they would reach some agreement tonight which would form the basis for future discussions. (Stalin interjected “tonight or tomorrow.”) Stalin then suggested a meeting tomorrow but, after a long aside with Molotov during which we conveyed unmistakably the impression that in our opinion the results were quite inadequate so far, he asked suddenly whether we wanted to settle the matter tonight. If so he could meet the American Ambassador and make the following proposal:

(1) There should be a simultaneous introduction in Berlin of the Soviet zone Deutsche mark in place of the western mark B, together with the removal of all transport restrictions.

(2) He would no longer ask as a condition the deferment of the implementation of the London decisions although he wished this to be recorded as the insistent wish of the Soviet Government. He explained that he realized that this requirement had put us in a difficult position.

The US Ambassador then asked Stalin about the announcement of a resumption of negotiations on Berlin and holding a four-power meeting to consider other problems affecting Germany. Stalin said they should be included.

The three western representatives agreed to present this proposal to their Governments with a joint recommendation that it should be accepted, they would endeavor to get a reply tomorrow, and they would inform Mr. Molotov as soon as possible of the decision of their Governments. The meeting then broke up in a very friendly atmosphere.

It was finally agreed that a communiqué should be issued by Soviet Ministry of Foreign Affairs stating that Stalin had received the three western representatives with Mr. Molotov present after 9 p. m., and that the meeting had lasted two hours. It was agreed that nothing more than this should be said at this stage by any of the governments concerned.

Repeated Berlin Eyes Only for Clay and Murphy as 272, Paris Eyes only for Caffery as 226, London Eyes Only for Douglas as 111.

Smith

1. In his telegram 1507, August 3, from Moscow, not printed, Ambassador Smith gave a brief, summary report on this meeting (740.00119 Control (Germany)/8–348). For other accounts of the meeting, see Smith, Moscow Mission, pp. 233–237 and Cmd. 7534, pp. 22–23.
2. Ante, p. 960.
3. Regarding the statement (or oral presentation) under reference here, see the record of the teletype conference of July 26, p. 989, and footnote 3 thereto.
4. See the record of the teletype conference of July 26, p. 989.