740.00119 EW/9–2249: Telegram

The Acting Secretary of State to the Office of the United States High Commissioner for Germany, at Frankfurt

top secret

1706, For McCloy. Re allocation of set aside plants to IARA, Bonn 6, Sep 21.1 We are committed by Wash Agreement to removal from West Ger of all plants on reparation list which were not taken off list as result Humphrey Comite review and subsequent agreement based on report of Comite. Validity this agreement not affected by question of what countries get set aside plants, disposition of which has been under discussion among three Govts for long time. In connection with negots on Humphrey Comite report, Brit proposed to us last Mar that plants be turned over to IARA. We expressed desire to defer decision in view possible CFM meeting, but agreed that, if plants were not disposed of in near future decision to give them to IARA wld be logical.

Fol CFM, Brit again approached us suggesting (a) all plants be given to IARA, or (b) 10% Sov share under Potsdam be delivered to USSR on condition Sov claim to remaining 15% and our claim to reciprocal deliveries be mutually waived. Brit proposed second course. In July, Dept, with approval of President, rejected Brit proposal and proposed that plants be turned over to IARA. This proposal has now been accepted by Brit and Fr.

At time Brit acceptance was conveyed to us, we raised question of consistency with idea of reviewing dismantling, which we understood Bevin would propose at FonMins talk in Wash. Brit subsequently informed us there was no inconsistency in their view, but we delayed action pending FonMins talk.

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At FonMins talk, subject was briefly alluded to (fact inadvertently omitted from summary of talk telegraphed you), it being stated that agreement had been reached to deliver plants to IARA.

In view foregoing, we consider ourselves clearly committed to go forward with allocation to IARA. Re penultimate para urtel reciprocal deliveries are reparations for IARA countries, so that when we in effect abandon them, IARA countries have legitimate claim to that part of Sov share. Our calculation is that Sovs have already received on account 10% of practically all they are entitled to. We understood that set aside plants represent less desirable plants in respective industrial categories. While we are still awaiting detailed info with respect to dismantling, info here indicated dismantling on these plants had progressed to substantial extent.

Foregoing answers question (b) urtel. Referring to other specific questions:

No negots seem necessary since list is already established, list of unallocated plants scheduled for removal in three zones (other than those removed from list by Apr agreement).
We have agreed that all three Govts shld bear responsibility for allocation to IARA. Therefore, joint letter signed by representatives three zones has seemed to us best procedure. Since we wish minimum publicity, we prefer letter be signed by Chiefs of Reparations Divisions rather than High Commissioners, which might attract more attention.
This matter does not require action or discussion by HICOG since it relates to action which will be taken by UK in IARA. As we understand it Brit will not bid on plants in this list, but have assured us they will not make any public statement which would embarrass us.
Resolution has already been adopted by IARA.

  1. Not printed.