Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

840.811/8–1048: Telegram

The Ambassador in Yugoslavia (Cannon) to the Secretary of State

us urgent

Belgrade, August 10, 1948.

Deldu50. From Dustmann for Michael McDermott and Dunning. At night session August 10, Cannon gave following on US amendment to Article 1 of Soviet draft:¹

Article 1 as proposed by Soviet delegate does not contain necessary safeguards to remedy [or] eliminate present impediments to more effective use river which my goverment deeply deplores. Impediments surely are also of concern to other states sincerely interested in reestablishing prosperous Danube shipping conditions.

There has been much talk of “imperalism” here. Proposed additional wording introduces necessary safeguards to avert imperialistic designs, from any direction, and supports sovereignty Danubian states. US proposed additional wording not only for sake of principle and objective, but also because history of past few years has clearly shown discrimination rampant, economic penetration undertaken to detriment of Danubian countries concerned and progress trade recovery in general.

I should like to clarify some basic points which Soviet delegate made in statement to rebut my statements re Danube economic penetration. He denied Soviet participation in joint companies and formation Soviet companies amounts to Soviet control. He claims there is equal participation and no infringement sovereignty countries involved since chairman these companies always national of state concerned. That not much safeguard. Significant fact about companies is that they not operated by chairmen but by directors general who not nationals countries concerned. Directors general of joint companies are Soviet citizens.

The proposed United States amendment would add this final sentence: “Equality in regard to port and navigation charges and conditions for merchant shipping shall be considered as excluding discrimination on the basis of the flag or ownership of vessels or on any other basis whatsoever.”

The Soviet delegate further quotes Article 1 of Yugoslav treaty to prove companies obey laws rules of given country and have same rights as Yugoslav companies. He failed to mention in most important respects, Soviet enterprises joint companies are granted same conditions which are, or will be, allowed to most privileged state, municipal or private enterprise. Refer to annex 1 of Soviet-Hungarian agreement of December 9, 1947, which grants privileges on supply materials and obtaining of foreign exchange. Refer to annex 5 of same agreement wherein USSR acknowleges certain decrees issued by Hungarian Government exempting joint-Soviet companies from payment of certain taxes, fees and duties.

Same and other privileges are granted to joint companies. I refer to provision in Soviet-Rumanian agreement by which ships of Soviet-Rumanian transport² passing Sulina Channel pay tariff 1/3 less than charged any other company. Another example of special privilege is contract between Hungarian Government and joint Meszhart Shipping Company³ which for 30 years leases Port Budapest practically all harbor equipment, including docks, loading stations, factories, dwellings, auxiliary other buildings, warehouses, elevators, mechanical transhipment facilities, railways and other communication lines in port area. How can you speak of freedom navigation Hungarian Danube when Port Budapest under monopoly control of Meszhart Companies.

Let us turn back now to language of amendment. You will note USDel has not used language proposed in original US draft. While we still consider language in Article 1 of draft submitted last week as preferable, there was certain amount of confusing talks regarding it and its relation to articles of Peace Treaties. It has several times been declared that language first proposed by USDel different from treaty language. We proposed amendment which is explanatory addition to treaty language.

Speaking on preamble this morning, Vishinsky said “They (France, US and UK) agreed to this formula 2 years ago and nothing has changed since”. This is precisely our point—objective was to free navigation. Now after 2 years it is quite true “nothing has changed” since, although treaties in effect nearly year.

Soviet delegate has numerous occasions taken position any suggested change or clarification of words adopted by CFM for peace treaties is attempt to distort true meaning of CFM decision. I should like to ask Soviet delegate to give conference definition of what he understands by words “conditions for merchant shipping”. Only definition I have come across in record is statement Molotov, November 28, 1946. This proposal introduced by Molotov who said (I am reading from US record in English) “I have proposal to make. Mr. Byrnes said he interested paragraph 1 of proposals re Danube. I have proposal in relation to it. In first place, it takes into account June 29 amendment proposed by M. Bidault⁴ and includes Soviet amendments. ‘Navigation on Danube shall be free and open on terms of entire equality in as much as this concerns port navigation charges and conditions of commercial shipping within limits of ordinary commercial terms.’”

The word “entire” has appeared at numerous times and I am not quite clear at what time it dropped out.

Later in debate, French representative asked: “What does Soviet delegate understand by meaning ‘within limits usual commercial relations.’” Molotov replied: “There are certain commercial arrangements which establish tariff charges, etc., when some given favored treatment in one respect not in another, and various details that sort. Some countries more interested in one condition, some in another, and they combine aspects most advantageous them”.

I must frankly say I do not know what it means. I hope before committee votes on article Soviet delegate will explain it for benefit of states which being asked to accept Soviet draft.

[The closing paragraph, here omitted, contained the telegraphic wording of Article I in the Soviet draft convention, and the additional sentence of the United States amendment.]

• [Dustmann]
• Cannon

1. Article I of the Soviet draft convention reads: “Navigation on the Danube shall be free and open for the nationals, vessels of commerce, and goods of all States, on a footing of equality in regard to port and navigation charges and conditions for merchant shipping. The foregoing shall not apply to traffic between ports of the same State.”

   Proposed US amendment designed to clarify and point up basic issue before conference—Is shipping on Danube to be permitted on basis equality between various flags? Or is shipping to be permitted only on basis of special agreements, granting privileged companies exclusive or preferential treatment? Issue is clear—discriminatory or non-discriminatory treatment. If conference supports principle of non-discrimination it can hardly reject US amendment. Rejection of amendment will be notice to world that it not intention conference to see that Danube is really open to vessels of all nations.

2. Sovromtransport was the Joint Soviet-Romanian Shipping Company established by agreement signed at Bucharest on July 19, 1945.
3. Meszhart was the Joint Soviet-Hungarian Navigation Company established by agreement signed at Budapest on March 29, 1946. It was exempted from taxes and duties by a Hungarian decree of April 12, 1947.
4. Georges Bidault at this time was Provisional President, Premier, and Minister of Foreign Affairs of France.