United States Minutes of Fourth Combined Meeting on Lend-Lease Settlement Negotiations 1
|Mr. W. L. Thorp, U.S. Chairman||The Soviet Ambassador, Mr. Alexander S. Panyushkin|
|Mr. H. R. Labouisse, Jr., U.S. Deputy Chairman||Mr. N. I. Cheklin|
|Mr. Koulakov, Interpreter|
|Mr. W. C. Armstrong|
|Mr. G. E. Truesdell, U.S. Assistant Secretary|
Mr. Thorp greeted the Soviet Ambassador and remarked that he had noted Mr. Arutiunian’s recent speech in New York with much interest. He said that it was a good but lengthy dissertation and his only criticism concerned the unfortunate remarks made against the United States. The Ambassador replied that Soviet representatives criticized the United States and, on the other hand, United States representatives criticized the Soviet Union.
The Ambassador stated that his purpose in requesting today’s meeting was to discuss one minor point. He observed that at the last meeting, which had been a long one, each side had agreed to study the viewpoint of the other. He said that Mr. Thorp had made this proposal and that he had agreed for the Soviet side. He referred to the recent Soviet note concerning the return to the United States of 8 lend-lease ships and stated that minor troubles had arisen in connection with the return of one of these ships as set forth in his note of February 24, 1948. A second point which he proposed to discuss at this time concerned the purchase of the 36 war-built ships as mentioned in a second note forwarded to Mr. Thorp on February 24. The Ambassador observed that in agreeing to the purchase of the 36 war-built ships, the Soviet side had taken into account the wishes of the United States Government as set forth in the United States note of January 23. He observed that this was in accord with the United States position stated by Mr. Thorp at the last meeting. The Ambassador proposed to discuss the question of the 36 war-built ships first.
Mr. Thorp replied by referring to the ship in Hong Kong which the Ambassador had stated to be the source of minor difficulties. He said that the Soviet note in regard to this ship had come as a complete surprise and that the United States side had cabled Hong Kong regarding [Page 972] the matter. He informed the Ambassador that our instructions had been to the effect that the redelivery of the 8 vessels should take place without delay upon completion of the inventory. He said that it was a fact that certain things had to be done to the ship in Hong Kong but that these things were to be done by the United States and paid for by the United States. The Soviet Government is not required to carry out any of these operations and it is not suggested that the Soviet Government should assume these responsibilities. He further stated that it was the belief of the Department that the transfer of this vessel had already been accomplished.2
The Soviet Ambassador replied that there appeared to be a misunderstanding and that he did not intend to create a difficulty which apparently did not exist. Mr. Thorp responded that the United States also did not wish to create difficulties.
Mr. Thorp referred to the Soviet note concerning the purchase of the 36 war-built vessels. He expressed his satisfaction that the two sides had been able to reach agreement on this part of the lend-lease problem and defined the Soviet note as a further step in the direction of an over-all lend-lease settlement. He then asked the Ambassador whether the Soviet note meant that these are the only ships which the Soviet Government wished to purchase or whether there will be a series of notes concerning different problems. He said that it was the United States understanding that the Soviet Government wished to buy all of the merchant vessels. He said he was not clear as to the present Soviet position. The Ambassador replied that he was desirous of settling this particular matter. With reference to the principle concerning the sale of all ships as set forth in the Soviet note of December 16, his desire to consummate the sale of the 36 ships separately did not in any way contradict the proposal made in this note nor did it contradict the proposals in the United States note of January 23. He observed that the United States note expressed the willingness of the United States to sell all of the ships. Mr. Thorp stated that he continued to be puzzled as to why the Ambassador had not mentioned the other ships. The Ambassador replied that he desired to purchase the remaining ships but that his proposal in his note of February 24 did not run counter to the United States position. He said that the disposition of the remaining vessels would be taken care of in the future. Mr. Thorp stated that he assumed the Ambassador would wish to negotiate with respect to the remaining vessels.
Mr. Thorp introduced the subject of naval vessels, referring to the three ice-breakers and the 28 frigates which the United States desires [Page 973] be returned to the United States, and to the United States request for a list of other naval ships which the U.S.S.R. desires to purchase. He said that the United States side was completely in the dark in regard to this matter. He suggested that the Ambassador might wish to have a group of experts discuss this problem or the Ambassador might wish to discuss this matter at the next meeting. The Ambassador replied that he preferred to discuss naval ships at the next meeting. He then mentioned that Mr. Labouisse had presented to Mr. Arutiunian some time ago3 a list of prices and terms acceptable to the United States in the sale of the 36 war-built merchant ships.
Mr. Thorp referred to the proposed outline of main points of settlement presented to the Soviet Delegation on June 25, 1947 and read from the first paragraph of that outline as follows: “As both sides have understood from the outset, the reaching of agreement upon any one issue is tentative and subject to the conclusion of a satisfactory comprehensive settlement”. He said that with respect to the sale of the 36 ships, the United States can say that agreement has been reached and that the matter now remains for inclusion in the over-all settlement agreement and further discussion of this matter is unnecessary until the other points have been settled. He stated that the United States side was pleased to have this matter set aside so that attention could be directed to other problems and, eventually, to the final agreement.
The Soviet Ambassador asked if the United States had any objection to the sale of these 36 war-built ships. Mr. Thorp replied that the United States did not have any objection to such a sale as a part of the over-all settlement. The Ambassador stated that he was satisfied with this statement by Mr. Thorp and asked where and when the advance payment should be made as required by the Merchant Ship Sales Act. Mr. Thorp replied that such a payment would not be necessary until an over-all settlement is reached. However, he would send a reply to the Ambassador’s note concerning the 36 war-built ships on or before Friday, February 27.
The Ambassador asked if he could report to his Government that the United States had no objection to the sale of the ships. Mr. Thorp replied that he could report that the United States had no objection to the sale as a part of the over-all settlement.
The Soviet Ambassador stated that he, too, desired an over-all settlement. However, he pointed out that since 1946 the United States had offered to sell these ships separately. Mr. Thorp stated that in 1946 the United States had offered the vessels for sale under the terms of the [Page 974] Merchant Ship Sales Act and that the Soviet Government by note dated in April 1946 stated that it would consider this matter in the over-all settlement negotiations.4 The United States had agreed to this procedure and adhered to it since that date.
The Ambassador agreed that there was no difference in the two approaches to the problem but he felt that a separate sale of these vessels would not be contradictory to the United States position. He asked, if the United States had settled concerning the return of the 8 vessels why would it not then settle separately for the sale of these 36 ships. He said that this was contradictory in as much as the United States had no objection to the sale of the vessels.
Mr. Labouisse explained that the procedure now proposed by the United States side for the sale of the merchant vessels was most unusual. If the United States had followed the customary procedure the Soviet Government would have been required to purchase the ships under the complicated procedure of the Merchant Ship Sales Act. However, the United States in order to simplify the procedure had used the lend-lease settlement mechanism. The Department of State, although using the lend-lease mechanism, is required to follow the usual practices in regard to prices and terms. Otherwise it would be subject to criticism.
The Soviet Ambassador replied that the United States had already settled for the 8 ships and asked again why it could not settle separately for the others. Mr. Labouisse replied that the 8 vessels were not for sale and that the United States holds title to all the lend-lease merchant vessels now in Soviet custody. The Ambassador again asked the question why we could not handle this matter separately from the over-all settlement. Mr. Thorp stated that the United States has definite procedures for the sale of merchant vessels. Under this procedure the Soviet Government might not get any of these were it not for the lend-lease procedure under which the ships would be transferred directly to Soviet custody. He said that this was most important since authority to sell the ships under the usual procedure will expire in a few days. He said that the Maritime Commission had agreed to the Department of State’s transferring these ships in the over-all lend-lease settlement but not as a separate sale. He said that it was apparent that an over-all agreement should be reached on other matters as rapidly as possible.
The Ambassador again asked why the sale of the 36 war-built ships could not be completed now. Mr. Thorp replied that the United States desired to have all parts agreed upon before a final over-all settlement is reached. He concluded by repeating that the United States would [Page 975] reply to the Soviet note by Friday, Thereafter discussions could be held concerning naval vessels, remaining merchant vessels and other problems whenever the Soviet Ambassador desired and Mr. Thorp was not otherwise occupied in New York City.5
The Ambassador requested information as to whether or not the United States decision to sell the merchant vessels was firm and whether or not the expiration of the Merchant Ship Sales Act would affect the sale of these vessels under lend-lease. Mr. Thorp replied in the negative, stating that this would not affect a lend-lease transfer.
After an exchange of remarks concerning the recent celebration of the 30th Anniversary of the Soviet Red Army6 and the reception held at the Embassy, the meeting adjourned at 4:55 P. M.
- These are not agreed combined minutes. This meeting was held in the Department of State, beginning at 4:00 p. m.↩
- Final delivery of the tanker Krasnaya Armiya was reported to have been accomplished on February 26, 1948, at 9 a. m., Hong Kong time.↩
- See in the Outline of Main Points of Settlement, June 25, 1947, Foreign Relations, 1947, vol. iv, p. 696.↩
- Regarding the note of April 22, 1946, from the then Chargé of the Soviet Union Nikolay Vasilyevich Novikov, see Foreign Relations, 1946, vol. vi, footnote 9, p. 831.↩
- Assistant Secretary Thorp was the United States Representative at the Sixth Session of the United Nations Economic and Social Council at Lake Success, New York, between February 2 and March 11, 1948.↩
- The celebration on February 23 of the creation of the Red Army in 1918.↩