Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

740.00119 Control (Germany)/3–2949: Telegram

The Secretary of State to the Embassy in the United Kingdom

secret
us urgent
niact

Washington, March 30, 1949—8 p.m.

1108. For Holmes. We have been studying Brit proposal para, five principles trizonal fusion as reported urtel 1208 Mar 25¹ and urtel 1260 Mar 29.² We believe proposal opens avenue to agreement. If there is still time to do so, we wld be extremely anxious have this troublesome question resolved.

If Brit proposal means what we think it means, we think we could work out acceptable solution. However, we are not sure we have correctly interpreted it.

Our difficulty centers around phrase “or action” in section iii of the Brit draft which states that legislation or action by occupation authorities will require approval by Mil Gov having predominant voice plus agreement by one other Mil Gov. Since anything done by occupation authorities wld fall within category of “action”, this wld appear to mean that the predominant voice in all cases wld amount merely to veto power. Our understanding of ur comments in Embtel 1208 leads us to believe that perhaps Brit proposal is in fact less restrictive. In Embtel 1260 moreover we note that you raised similar point in your third objection and Brit stated language was not intended curtail authority US Mil Gov in this way. We wld like to sort out problem as follows and see whether or not there is actually basis for agreement in your opinion. We are therefore not suggesting actual language but merely breaking problem down into its different parts and wld appreciate ur views as to whether in your opinion at present stage negotiations proposal we cld accept wld lead to agreement with Brit.

1. Legislation by Occupation Authorities. We wld agree to Brit proposal that with respect to legislation by occupation authorities US predominant voice wld operate as a veto, that is to say, formula in section iii in Brit formula urtel 1260 wld be acceptable.

2. Administrative actions by Occupation Authorities. With respect to action by occupation authorities other than legislative, we believe a distinction must be made between action in fields of foreign trade and foreign exchange and those which directly affect foreign trade and foreign exchange.

(a) With respect to the control over foreign trade and foreign exchange, we must insist upon US predominant voice involving both affirmative action as well as preventing action by occupying powers. This wld, of course, not apply to legislation which is covered in our first proposal. It is our understanding that this in effect means the right to exercise the controlling voice in Allied agencies which control German foreign trade and foreign exchange. This is clearly covered by current Bizonal Fusion Agreement and we had assumed that there was no dispute on this point.

(b) With respect to action by the occupation authorities which directly affect foreign trade or foreign exchange, we wld be prepared to accept the Brit formula in section iii which wld give US Milgovernor veto but not permit him to take action over the objection of his two colleagues.

3. German Legislative and Administrative Actions Directly Affecting German Foreign Trade and Foreign Exchange. This has two problems. First problem is point you raised with respect to limitation to Federal as distinguished from Laender actions. Second problem relates to nature of action which is subject to US predominant voice.

(a) Federal. We will be willing to accept limitation to Federal action if this absolutely necessary. If we do, however, we wish have it clearly understood our agreement does not prejudice our position that tripartite policy should be uniformly applied throughout Western German area as a whole nor our position with respect to organization of tripartite Mil Gov under para 7 of principles. In cases where there is concurrent jurisdiction by the Federal Govt and Laender Govts this provision might lead to embarrassment to Mil Gov since contradictory position could be taken by Mil Gov with respect to legislation enacted by the Fed Govt on the one hand and by similar legislation by Land Govt on the other. To avoid this contradiction wld be desirable that the principle applicable to Federal legislation shld apply as well to Land legislation in fields where there is an overlap.

(b) We wld be willing to accept formula in section iii, with respect to approval or disapproval German legislative and administrative actions, subject to adjustment which Brit stated they were willing to make as outlined in regard your third objection (urtel 1260).

4. Ruhr Authority. We believe necessary clarify position with respect to Mil Gov action regarding Ruhr Authority. We feel we must insist that the US controlling voice apply affirmatively with respect to actions by occupation authorities in modifying allocations of the Ruhr Authority as provided in Article 22, section (i) IAR agreement of Dec. 28.³ It follows that US controlling voice must likewise apply to casting of German vote (article 9(c)) with respect to divisions of coal, coke and steel as between German consumption and export made under Article 14. In other words, with respect to allocations of coal, coke and steel it is necessary that the vote of Mil Gov on the Ruhr Authority be consistent with the action taken by the Mil Gov in implementing the decision of the Ruhr Authority. On all other issues arising before the Ruhr Authority US will agree that action by Mil Governors shall proceed by majority vote in the usual way.

5. As stated Deptel 1088,⁴ US agrees that predominant voice will not apply to any actions taken by Mil Governors under terms of PRI agreement.⁵

6. Who determines what directly affects German foreign trade and foreign exchange? Our proposal is based on premise that US Mil Gov will be judge (subject to appeal procedure) of what matters directly affect German foreign trade and foreign exchange and amount of the US contribution required. This appears to us to be implicit in the Brit proposal.

If above not in accordance with Brit position we wld appreciate full description from you of areas of difference.

Have not been able obtain Army concurrence to above and therefore cannot authorize you to submit it to Brit as US proposal. Hence it is being sent in effort assist you to narrow and clarify issues.

Acheson

1. Ante, p. 55.
2. Supra.
3. The text of the draft agreement for the establishment of an International Authority for the Ruhr, made public December 28, 1948, is printed in Foreign Relations, 1948, vol. ii, chapter ii, part b, p. 581.
4. Not printed.
5. For documentation relating to the negotiation of the agreement on prohibited and restricted industries in Germany, including the text of the tripartite draft agreement, see pp. 546 ff.