740.00119 Control (Germany)/8–2748: Telegram
The Ambassador in the Soviet Union (Smith) to the Secretary of State
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1777. For the Secretary Eyes Only, Caffery, Douglas, Clay and Murphy. Comments on communiqué (mytel 1776, August 271): Russian text of communiqué, as provisionally worked out August 23, furnished us yesterday by Pavlov contained an additional paragraph on London decisions as proposed by Stalin. We challenged this yesterday in writing and orally tonight. Molotov admitted that this additional paragraph had not been agreed to by us on August 23 but he understood that we were willing to obtain our government’s views regarding it. Discussion of this point was deferred until we had dealt with, the directive. Molotov confirmed without question Stalin’s assurance that transport restrictions to be lifted would include those prior to June 18.
Comments on directive:
Draft directive proposed by us was accepted in toto to include opening paragraph and first series paragraphs (A) and (B). In first paragraph after first series (B) he refused to accept our reference to the Finance Commission but offered in return to delete his reference to the German Bank of Emission. His argument on this and other points was that all the directive except the last two paragraphs represented subjects which were to be settled in Berlin by the Military Governors but that the last two paragraphs, including the establishment of the Finance Commission, had been settled here. Consequently, while willing to place responsibility on the four Military Governors, it was up to them to delegate this responsibility to their agency, the Finance Commission.
Second series (A): After considerable discussion it was agreed to omit Soviet clause and our own clause at end of the first sentence. Both understood the other’s point of view. Molotov asked for assurance, and we agreed that there would be no issue of western “B” marks in Berlin during the week that the discussions were in progress. It was understood that recent issues had been made because of emergencies arising from Soviet financial pressure. Recurrence of such emergencies would invalidate the assurance given Molotov but he should be placed on notice if the situation arises in Berlin during the coming week which would make such further issue necessary.
(B): Here again Molotov refused to accept reference to the Finance Commission for the reasons given above. He was willing to accept a statement that the “four Military Governors are charged with adequate [Page 1089] safeguards, etc.”. Again his contention was that it was the responsibility of the Military Governors to work out and provide adequate safeguards and that in so doing it lay within their discretion to utilize the Finance Commission which was an agency of the four Military Governors.
(C): Wording of this paragraph as it now stands was the result of Molotov’s suggestion made out of a clear sky, after brief statement by me that as anticipated my government was completely unwilling to accept Soviet proposal. His suggestion was that simplest solution to first sentence was to go back to western draft of August 62 with addition of second sentence of our latest draft.3 We then agreed with him to add “third countries”.
(D): Molotov insisted on reference to balancing of the budget as a matter for consideration by the Military Governors.
Last two paragraphs (E) and (F): Although they remain as originally written it was apparently Soviet intention that they should not be separated and that they should not be considered as lettered paragraphs covering questions which Military Governors are required to work out. Molotov argued that it was illogical to include references to the Finance Commission in any other paragraphs since this was not a matter on which the Military Governors had to work out arrangements. In the course of our discussion he reaffirmed Stalin’s affirmation of the control functions of the Finance Commission as given in our record of conversation of August 23 (Embtel 1728, August 244). During discussion on this subject, which was prolonged, it was necessary to read from the record several times Stalin’s specific statements.
London decisions: Both Molotov and Vyshinsky raised this question at the end of the meeting. We informed them that we could only offer the agreed additional sentence to add to the formula we presented to Stalin August 23 (Deptel 1008, August 245). Both of them studied this very attentively and Molotov finally suggested that it would be acceptable provided it stopped after the words “would not preclude such agreement”. He said that the remainder was unnecessary and that the rest of text (up to and including these words) gave the whole picture. I replied that the omission of the final sentence implied certain delicate shades of meaning which were unmistakable to us and which would appear to be unmistakable in Germany, if his version of text were published. He asked that the question be considered further and agreed that this need not hold up the dispatch of the directive to Berlin.
[Page 1090]We also discussed interim communiqué. Molotov’s reaction to our suggestion was that it would not give sufficient information with regard to details which had been discussed and he remarked in this connection that the Soviet people had so far heard nothing of our conversations. He may have suggestions of his own to make tomorrow with regard to wording.
Most noteworthy feature of conversations was 180 degree change of Molotov’s position. Whereas in past he has always argued we must settle and agree to details here, his attitude tonight was that everything except two final paragraphs were matters for discussion and agreement among Military Governors in Berlin. While my first reaction to this is one of some suspicion, we all took occasion to point out that if discussions in Berlin failed there would be no agreement at all. He agreed.
We believe that in the light of our own statements and of Molotov’s explanations recorded this evening the draft emerging from the meeting covers every essential point as satisfactorily from our point of view as we could reasonably expect, and leaves our representatives in Berlin a fair chance of arriving at agreement. There is of course the possibility that the Russians are agreeing to refer points to Berlin so that talks may break down there. But our own view, based on Molotov’s attitude tonight following on Stalin’s attitude on August 23, is that there is a chance they may accept agreement at this stage.
As we have warned in earlier telegrams, Soviet long-term intentions are quite another matter, and we have no illusions that an agreement which may now be worked out in Berlin will necessarily safeguard our position there indefinitely should Four-Power agreement on. Germany as a whole prove unattainable. But our task here has been a limited one, and we consider that the directive and communiqué as now agreed with Molotov cover the objective we were set in these Moscow conversations. We therefore recommend them for approval. Molotov was informed we would submit this latest version of directive by wire tonight and would tell him as soon as possible whether it was acceptable, and if so earliest date on which directive might be dispatched concurrently to the four Military Governors in Berlin. Please advise soonest in accordance with above.
Sent Department 1777; Department pass Paris 289, London 178, Berlin 344.