895.6463/3–2448: Telegram
The Political Adviser in Korea (Jacobs) to the Secretary of State
178. Cite Zpol 362. For Jones:1 Subject North Korea power. This radio in 5 parts.
Part 1. On 17 March 1948 Pyongyang liaison office telephoned contents of following letter delivered to it by Russian command:
“Dear General Hodge: As you are aware, there is an agreement concluded between the Soviet and American commands on 17 June 1947 about the order and time of payment for electrical power transmitted by electrical plants of North Korea for South Korea for the period 16 August 1945 to 31 May 1947, also there was a previous agreement about the order of payment since 31 August 1947, but up to this time the American Command has not fulfilled its 17 June 1947 agreement about the time lists and amount of goods to be given in payment for electrical power prior to 31 May 1947.
There have been goods given up to 15 March 1948 in the amount of 15.6 percent of costs of electrical power from 16 August 1945 to 31 May 1947, whereas in accordance to the 17 June agreement the list of [Page 1159] goods was to be filled by 17 December 1947, thus the American Command has not met the 17 June 1947 agreement for payment for power for the period since 31 May 1947. The American Command has not expressed its desire to conclude such an agreement.
Therefore the Soviet forces in North Korea can no longer act as a mediator between the American Command and the People’s Committee of North Korea which is in charge of electrical power stations in North Korea.
I am forwarding a copy of this letter to the Chairman of the People’s Committee of North Korea, Mr. Kim Il Sung. Respectfully, signed Korotkov.”
Certain ambiguities in foregoing text cannot be explained.
Part 2. On 20 March 1948, Pyongyang liaison office telephoned contents of lengthy letter signed by Kim Il Sung and delivered by a Korean to the Soviet Sergeant of the Guard on duty at liaison house. Although letter was not accepted, the English translation contained following significant features: (A) Power will be cut off if deliveries under 17 June 1947 agreement are not completed by 15 April 1948. (B) Meeting by 1 April requested for power furnished since 1 June 1947.
Part 3. Following letter is being dispatched from General Hodge to General Korotkov about 25 [22] March:
“My dear General Korotkov: In reply to your letter of 16 March 1948 on the subject of payment for electrical power, I share your desire to hasten the completion of our 17 June 1947 agreement covering payment for power obtained by South Korea from North Korea for the period 16 August 1945 to 31 May 1947. Your representative, when in Seoul to accept our fifth shipment against the agreement, was handed on 19 January 1948 a substitutional list containing 774 items complete with drawings and diagrams. Thus far, we have received no official comment on any of this offer. Had you agreed to accept any of the items suggested therein, as is expressly provided for in Note Number Two of Paragraph Two of our 17 June 1947 agreement, the completion of the deliveries would have been expedited.
I again invite your attention to this list which is attached as enclosure number one. I also repeat my offer of 1 December 1947 to make an immediate settlement in American dollars for the unpaid balance of the 17 June 1947 agreement. In the meantime, my command has placed orders outside of South Korea, over the past year, for materials most of which are now en route and which, upon delivery over the next four months, will enable us to substantially meet the agreement. Your acceptance of substitutional items appearing in enclosure number one would enable my command to completely meet the agreement by an earlier date. I suggest that the final price agreements on disputed items be effected at the time the agreement has been substantially met.
It is also my desire to come to an agreement with you for the power obtained since 31 May 1947. The meeting of 27 October 1947, which [Page 1160] I originally suggested to that end, failed in its purpose. Accordingly I suggest that we arrange another meeting in Pyongyang as early as possible and not later than 8 April 1948 of representatives of our military commands and their Korean representatives in the civil administrations for the purpose of establishing a basis for settlement for power received since 31 May 1947. I note with surprise your statement that the Soviet Command can no longer act as mediator between the American Command and the North Korean People’s Committee. I can not recognize that you have ever acted as a mediator. The 17 June agreement was, as you say in your letter, an agreement between the American and Soviet Commands, not between the American Command and North Korean People’s Committee. Furthermore, all other dealings, both in conferences and in the transfers of goods, have been between my representatives and your representatives. Moreover, you are fully aware that, since the occupation of Korea by the military forces of the USSR and the USA, responsibility for all matters affecting the interrelations of the two zones have been assumed by representatives of the two military commands. I consider that you remain fully responsible for future negotiations and for the future supply of electrical power to South Korea. Signed Hodge.”
Part 4. An estimate of the present situation follows: (a) Based on commitments from Japan and US, 85 percent of deliveries against the 17 June 1947 contract will be completed by 1 August. It is hoped substitutions will be accepted for the balance. (b) Successful negotiation of agreement for period after 31 May 1947 not expected. A complete settlement of this account is not consistent with Soviet political objectives to leave South Korea in debt to North Korea. Soviets may send only Koreans to proposed meeting, with whom American Command will refuse to negotiate, or they may demand exorbitant terms similar to those that wrecked previous discussions in October 1947 on power used after 31 May 1947. (c) Since Russians desire goods, the cutting of power may be forestalled until a greater percentage of deliveries on old contract completed or until new Korean Government is set up. (d) A cut-off of power should therefore be expected sometime during summer, probably following elections and prior to or coincident with establishment of new Korean Government.
Part 5. Dispatch follows by pouch2 setting forth in full proposed policy of American Command on negotiations with Russians on this matter and basis of handling North Korea power account with new Korean Government. Full texts of all letters and G–4 reports on status of present contract will also be included.”