660C.6131/4–348: Telegram

The Ambassador in Poland (Griffis) to the Secretary of State


477. Embassy has utilized Grosfeld’s1 presence here during past week (he returned Moscow April 3) to review Polish foreign trade position with him, his principal deputy Horowitz, and with Lychowski Director Economic Department Foreign Office. All are spokesmen for Minc though Lychowski partially responsible also to Modzelewski.2 On basis two comprehensive conversations with each, following facts and conclusions emerge:

Berman3 has been eclipsed and strong men present regime, in probable order importance, are Gomulka4 and Minc. Latter absolute [Page 529] Czar over Polish economy and has also assumed highly important political functions.
Present American export controls, and particularly our refusal of export license for blooming and slabbing mill now being manufactured by [an American firm] for sale to and export by Polish-American Supply Corporation, New York viewed very seriously by Minc and may cause reversal present Polish foreign trade policy and pattern.
Grosfeld and Horowitz have led fight for trade with west, featured by search for dollars. Pattern of this trade has been to forsake strict bilateral agreements with balanced clearings in favor of bilateral agreements calling for favorable or adverse balance of payments to be liquidated in dollars or other free currencies which could be utilized by Poland in purchasing needed capital goods and raw materials from US and dollar area. In this way Poland has maneuvered trade, especially in coal, to earn dollars 80 million since war. Minc has always been suspicious of this pattern and has favored strict bilateral clearing arrangements with countries dependent on Polish exports and those which might not be expected to follow lead of US export embargoes to Poland. Switzerland, Sweden and Belgium and to lesser degree France, Italy and Great Britain deemed to fall in latter category. Institution of American export licenses and action regarding blooming mill have strengthened Mine’s arguments versus contrary school that long-range interests of Poland not served by earning dollars for purchases of goods which may later be boycotted by US.
This consideration plus political factors makes Poland hesitant to activate trade agreement with Bizonia. Grosfeld after conversation with Minc has left distinct impression that such will be done only if bilateral clearing arrangement established, though it would be interested in purchase of scrap or sale of coal outside clearing.
Poland would regret forsaking present pattern of foreign trade and necessity of increasing trade relations with eastern bloc as it is realized that such would delay recovery. Nevertheless Minc believes eastern bloc could be made self-sufficient within a few years and that reorganizing Polish foreign trade on strict balance clearing basis would insure Poland against dangers of boycotts from US or certain other countries. He thus reflects fear that at crucial time ERP will become weapon of economic warfare versus eastern bloc.
Poles believe trade agreement with Great Britain will not be abrogated in whole or part by British and that Switzerland and Sweden will not follow lead of any US boycott of shipments of capital goods to Poland. Perhaps under Kremlin inspiration and in effort drive wedge between US and UK Grosfeld has stated that Poles view with extreme disfavor American efforts to force devaluation of the pound.
Grosfeld states Poland will understand discrimination against Poland in favor ERP countries in export licensing of articles of interchangeable utility but that blooming mill a special case, that it cannot be used in another country without substantial alterations, and that in view fact that Poland has paid 70% purchase price, he can only view [Page 530] our action as overt discrimination and indication of policy to impede Polish recovery. Though acknowledging fact that mill might be considered war potential, he points out that in present world of total wars any commodity, including food, may be considered war potential.
My own opinion is that the entire argument as stated above is completely specious and represents carefully rehearsed instructions and the fine Italian hand of Minc. It is part and parcel of the campaign arranged in consultation with Winiewicz and Zoltowski5 to bring pressure on the US Government in connection with the settlement of the various matters under negotiation such as the nationalization agreement, lease-lend settlements, etc. It does not make sense to me that the Polish Government does not desperately desire dollars which can be used to purchase capital goods in substantially any country in the world which has such goods.
As to the mill, my understanding is that it will not be completed before July. It could not thereafter be shipped and installed here within a year. It could not then be placed in operation before completion in late 1949 of subsidiary electrical equipment being manufactured by [an American firm]. Poles intend to pay balance under contracts even if molds not shipped because of inability to obtain export license. But even if licenses granted, seems unlikely plant could be brought into operation until mid-1950 at earliest, and probably later.
Since dictating the above, I have received your cable 205 April 2.6 Certainly the Department is correct in stating that the licenses are not connected in any way with the nationalization agreement and/or the lease-lend settlement. However, I greatly hope and urge that no favorable action will be taken on the export licenses except in constant consultation with this Embassy. Whatever the connection or lack of connection with the other financial agreements may be, there is certainly a connection between any favors which may be asked by the Polish Government from the US Government and the continual and unceasing violation by the Polish Government of the most elemental amenities between governments. I refer to the daily vicious poisonous and lying attacks of every newspaper in Poland against the US Government and its personalities, from President Truman and the Secretary down. I refer to the continued and barbarian refusal of the Polish Government to permit any representatives of this Embassy to visit bona fide American prisoners held under medieval conditions and incommunicado. I refer to the insulting and constant espionage on our people, both within and outside of the Embassy. There is a connection here and a real one. I might go along with the theory that this is not the time for a showdown, but the time must come, and we should not, without serious consideration, give up any trading elements which may appear.

  1. Adam Grosfeld, Polish Minister for Navigation and Foreign Trade.
  2. Zygmunt Modzelewski, Polish Minister for Foreign Affairs.
  3. Jakub Berman, Member of the Politburo of the Polish Workers Party and Under Secretary of State in the Polish Council of Ministers.
  4. Wladyslaw Gomulka, First Secretary and Member of the Politburo of the Polish Workers Party (until September 1948); Polish Minister for the Regained Territories.
  5. Janusz Zoltowski, Financial Counselor of the Polish Embassy in the United States.
  6. Not printed.