740.00119 EW/3–348–Telegram
The Ambassador in the United Kingdom (Douglas) to the Secretary of State
urgent
niact
849. For Lovett from Douglas. Embtel 786 [Delsec 1593] March 1.1 Last evening Murphy and I discussed with Massigli, Alphand, and Strang the matter of reparations.
- 1.
- The discussion was divided into two parts: the first dealing with delivery of reparations to the USSR; the second with suspension of dismantling of a limited number of plants, their retention in Germany, and the substitution for dismantling and delivery of plants not now identified for this purpose, in lieu of any plants now identified for dismantling which may be retained.
- 2.
- As to the first, the French and the British took the view that not to inform the Soviet of our proposition prior to quadripartite allocation by the Control Council in Berlin would be a devious procedure to follow. If, on the other hand, the Soviet were informed prior to quadripartite allocation by the Control Council in Berlin, the Soviet would probably, by the exercise of the veto, prevent all allocations, and that as a result, quadripartite allocation for reparations would terminate and machinery for tripartite allocation would necessarily have to be substituted. In this event, Alphand and Massigli expressed anxiety that one or more of the satellite representatives in IARA would be able to exercise some form of veto and thus block allocations of the 75 percent portion of the capital equipment allocated to the west. We insisted that the Paris agreement of December, 1945, provided for a majority vote and also provided for arbitration procedure which would prevent Yugoslavia, for example, from exercising a veto over allocations to France. The French said that they would contact Bidault today on this question and if our view on IARA procedure is confirmed, they believe that they will be able to go along.
- 3.
- Strang, for the British, referred again to Mr. Bevin’s views regarding deliveries to the Soviet Union and stated that Mr. Bevin has not as yet indicated to him a change of opinion, that Mr. Bevin felt that if we fail to deliver we would be guilty of violation of the Potsdam protocol and that it was otherwise advisable to keep up the “trickle” to the east because it was uncertain in character and in doing so we might obviate complications (undefined) with the USSR.
- 4.
- In response to Strang, we
made it clear that the Potsdam agreement should be considered in its
entirety; that the Soviet have frustrated the honoring of its
provisions for a period of more than two years; that we had
postponed taking action long overdue in our zones with the
consequent heavy cost for the US, and the UK and the recovery of
Western Europe; and that there was, accordingly, no validity to the
argument that if the UK, French, and US decide to stop delivery of
reparations from Western Europe to the USSR except upon the terms of
the cabinet proposal, we would be guilty of a violation of the
Potsdam agreement.
In this connection we made the point that we would deliver 60 percent of the 25 percent to the Soviet on condition that they agree to send us as a consideration commodities of value equal to the reparations to be sent, and that the 40 percent of the 25 percent would be held by us pending Soviet honoring of the Potsdam agreement. Moreover, we emphasized that regardless of what we do, the USSR through its propaganda media accuses the western powers daily of violations of Potsdam.
- 5.
- As to the second part of the reparations question, listed above in
paragraph 1, Alphand
repeatedly brought up the question of additional machine tool
deliveries to the west, insisting that further examination be given
to the retention in Germany of a stock of machine tools which the
French consider unjustified under the present level of industry. We
said that this question is not directly connected with the principal
point involved in the present discussion, but that we would consider
a request by the French for a review of the question. We recalled in
that connection a discussion which took place in London last summer
incident to the 1947 level of industry plan and referred to the
difference in the method of calculation used by the French regarding
machine tool obsolescence, etc.
Alphand asked whether any of the plants, the dismantling of which might be terminated and which might be retained in Germany, had been notified to the Control Council for allocation. We replied that we thought none of them had been so notified to the Control Council, though probably the IARA countries had been informed.
Alphand and Massigli thought that substitution would make it easier for them to agree to our proposal.
- 6.
- For the British, Strang expressed considerable concern, indeed as much concern over the second part of the reparations question as over the first. He indicated that substitution of plants would have to be contingent upon agreement with the Germans, for they had already made commitments to the Germans that only those plants identified for dismantling would actually be dismantled.
- 7.
- Both the British and the French, but particularly the latter,
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emphasized the importance
of making it clear, if our proposals were agreed to, that they did
not mean the suspension of all reparations, but rather merely a
minor modification in kind without any alteration in the total
volume and amount. If this were not emphasized, they both felt, and
again particularly the French, that the proposals would have an
extraordinarily adverse political effect in all the IARA countries, including France.
We attempted to make it clear that our proposals did not contemplate suspension of reparations to the IARA countries, or a modification of the total amount, if substitution were agreed to, and that probably the total number of plants which would be retained would not exceed 15 or 20.
- 8.
- I am seeing Bevin today and hope that I may be able to persuade him to modify his views.