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

740.00119 Control (Germany)/8–948: Telegram

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

top secret
urgent
niact

Moscow, August 9, 1948—11 p. m.

1569. Eyes Only for Secretary: Eyes Only for Murphy, Clay, Douglas and Caffery. At another three-hour meeting with Molotov this afternoon he handed us¹ Soviet counterproposal (see mytel 1570 immediately following²) asserting that he had used our draft³ as basis, making only such changes as Soviet Govt considered necessary. After short study Roberts and Chataigneau asked the following questions:

1. Why had the same date been stated in paragraphs 1, 2 and 4?

2. What was meant by separate conference in paragraph 3 and was this reference to the Military Governors in Berlin?

3. Did proposals for currency changes in paragraph 4 imply unilateral Soviet decision, or would they result from Four Power agreement?

4. Why was there no mention of quadripartite control in paragraph 4 in view of fundamental importance attached to this matter by western Governments?

5. Why did paragraph 3 contain reference to exchange of statements regarding London Conference decisions since Stalin has specified this was not to be a condition?

6. What was the significance of concluding words of paragraph 1 “in accordance with the present agreement” which did not appear in paragraphs 2 or 4?

Brief of Molotov’s replies are as follows:

1. Any convenient date would do, but it should be specified.

2. Molotov rather evaded this question and suggested that more precise proposals might be made by us.

3. Since the currency was Soviet Zone currency, it was natural and proper it should be introduced under Soviet authority.

4. Quadripartite control had ceased as result of London decisions. If agreement were reached for the restoration of quadripartite control in Germany as a whole then it might also be restored in Berlin.

5. Importance of this point had already been stressed and wording summarized discussion which had taken place between us and which had already been discussed in detail in press of US, UK and France. It was proper therefore to state the position publicly although he did not exclude covering the matter in a separate exchange of notes.

6. This phrase was interrelated with paragraph 4 to ensure removal of traffic restrictions simultaneously with the currency change.

After this discussion I asked Molotov:

1. Was the principal reason for including the added reference in paragraph 3 to the wish of the Soviet Govt in connection with the London decisions, a matter which we had understood from Stalin’s statement was not insisted upon as a condition in connection with our discussions, fact that reports and speculation in connection therewith had appeared in the press; or

2. Was the second sentence of this part of paragraph 3 beginning “in this connection” simply verbiage Molotov wished our govts to accept; or

3. Was this his interpretation of the oral statement given by me and indorsed by my colleagues on the occasion of our last meeting.

If the first were the case I could say that my govt had taken the trouble to determine the source of the article on this subject which appeared in the US papers. The origin of this source was not in the US Govt, consequently so far as my govt was concerned this part of the discussion still remained, like the rest, an official secret. If the second were the case, I wished to remind him that on the occasion of our previous discussion I had emphasized that the western powers could not accept as precondition for negotiations the suspension or modification of any measures in force or contemplated for the western zones.

As to the third, there was no question of the meaning of the oral statement I had made on this occasion. Fortunately I had with me the note from which I had made this statement, which I would now repeat. After repeating my remarks as per Deptel 898 August 4⁴ I asked Pavlov if in the interest of clarity he would like to make a copy. Molotov said this would be a good idea. We made it quite clear that this was a fundamental issue. Molotov also insisted on the importance of the matter from the Soviet point of view and repeated that if there was any misunderstanding as to the exact wording, the sense of which he had interpreted as indicated in the Soviet draft, this wording could be modified to give its correct meaning. He suggested again that we might accept this under some other form which might be agreed upon between us. We have given him no encouragement whatever and restated the position of our govts.

Then said that I would ask one more question which, while blunt, was extremely pertinent. Was it or was it not the intention of the Soviet Govt to take over unilateral control of the western sectors of Berlin through the introduction of the Soviet mark? His reaction to this was interesting as he apparently did not know whether to reply angrily or to sidestep the question. After a moment he sidestepped by saying in effect that the Soviet position had been made very clear in previous discussions. He then amplified at some length his answers to previous questions (a summarization of his statements from the detailed minutes will be sent tomorrow⁵). When he completed his remarks I said that the Soviet draft seems to us to be a decided change from what we gathered to be the Soviet attitude at the time of our discussions with Stalin. It appears to depart materially from our concept of the basic formula which Stalin suggested at our first meeting. We would, of course, submit this new draft to our govts, but I felt bound to state that in my judgment it would not prove acceptable. Molotov was entitled to know my reasons for this conclusion, which were briefly:

As repeatedly emphasized previously, the position of my govt and the Govts of UK and France was that the western powers were in Berlin by right and not by Soviet sufferance. They intended to remain in Berlin, to maintain their rights, and to discharge their obligations in regard to greater Berlin. Therefore, it was quite impossible for the western powers to accept any arrangements with regard to Berlin’s currency which would in effect turn over to the Soviet authorities economic or other control of the western sectors which it was our responsibility to exercise. We would be naive indeed to agree to a proposal for opening traffic communications for freight and personnel into Berlin, and at the same time accept a position with regard to currency in Berlin which would make it impossible for us to continue to carry out our responsibilities there. I had already stated and re-emphasized that the western powers could not accept as a precondition for negotiation the suspension or modification of the London decisions. To do so would be to accept duress of a different kind, and would neither relieve the present situation nor create the necessary conditions for reasonable quadripartite discussion. If, however, the Soviet Govt was sincere in its intentions with regard to negotiations and did not have as its objective the securing of unilateral control in Berlin, it was probable that some currency formula might be found.

Molotov said that the position of the Soviet Govt had also been made clear. The French and British representatives associated themselves with my statement and made some additions, emphasizing our fundamental objection to the Soviet draft and maintaining our right to make additional comments on other details later.

Molotov replied with a lengthy explanation and defense of Soviet position which evaded all our objections and followed very much the lines of his previous statement (Embtel 1558 August 7⁶). He then asked why we had not raised the issue of quadripartite control of currency in our talk with Stalin August 2. To this we replied that the opening discussion was on matters of principle and not on questions of detail. However, I reminded him that our opening statement clearly defined our position on quadripartite control in Berlin. We declared then that we had no intention of abandoning our responsibilities in connection with Four Power control of Berlin, and this opening statement governed all subsequent points in the discussion and must be considered as applying thereto. Molotov continued to deny that we had any claim to exercise quadripartite authority in Berlin until such authority had been restored in Germany as a whole. He argued at length that for practical reasons there could be only one controlling authority for currency in Berlin and that adequate safeguards were provided in Soviet draft to meet our objections in regard to non-discrimination, trade, occupation cost, etc, etc., particularly with regard to the latter. He reaffirmed the Soviet contention that occupation costs should be drawn from the east and west zones and Berlin be freed thereof. He refused to admit that any useful purpose would be served by the (Military Governors or their representatives discussing currency of other matters in Berlin since these and other questions had long ago been taken over by the several govts. He reiterated his contention that we should settle these matters here. Our incapacity to discuss currency matters was reaffirmed here and restated half a dozen times during the conversation. We also restated our govt’s positions with regard to quadripartite control and on the question of currency, and concluded by saying again that we would report the Soviet counterdraft together with Molotov’s explanations, making it quite clear at the same time that in our opinion his proposals would not be found acceptable.

The atmosphere was generally that of the last meeting. There was no acrimony or overt hostility and Molotov was patient under cross examination. He understands our position, I am sure, as we understand his and if nothing else is accomplished the Soviet objectives are emerging with great clarity. However, I do not think that Molotov has said his last word.

I am not exactly clear in my own mind as to what our next move should be and will comment further on this aspect tomorrow after reviewing the full transcript of the conversation. My present thought is that we should try to go to Stalin next time but my colleagues may prefer to have one more round with Molotov.

Smith

1. The meeting was held at 5 p. m. at the Kremlin and was attended by Smith (U.S.), Chataigneau and Boyer de Fonscolombe (France), Roberts and Lunghi (U.K.), and Molotov, Smirnov, Pavlov and Yerofeyev (U.S.S.R.).
2. The telegram under reference here is not printed. For the text of Molotov’s counterdraft, see The Berlin Crisis, pp. 23–24 or Cmd. 7534, p. 26.
3. See telegram 1528, August 5, from Moscow, p. 1016.
4. Not printed; it transmitted the special supplementary instructions to Ambassador Smith printed in The Berlin Crisis, pp. 21–22.
5. The summarization of Molotov’s statements was transmitted in telegram 1577, August 10, from Moscow, not printed (740.00119) Control (Germany)/8–1048).
6. Not printed; for a summary of Molotov’s previous statement see telegram 1544, August 6, from Moscow, p. 1018.