Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

861.24/1–1149

The Ambassador of the Soviet Union (Panyushkin) to the Secretary of State

confidential

[Washington,] January 11, 1949.

No. 2

Sir: In connection with the note of Acting Secretary of State Lovett dated September 14, 1948,¹ I have the honor, on instructions from the Soviet Government, to communicate the following:

In a conversation with Mr. Lovett on July 1, 1948² I pointed out the discrimination exercised by the Government of the USA in regard to the exportation to the USSR of equipment ordered in the USA by Soviet organizations, a discrimination causing considerable damage to the Soviet organizations in connection with the claims of American firms which have arisen as a result of the enforced discontinuation of the filling of orders.³

I pointed out that, according to the claims of American firms already presented at that time, the sum of the direct leases of Soviet organizations amounted to 1,300 thousand dollars and that this sum is far from covering all the damage caused the Soviet organizations by the discriminatory action of the American Government. In addition, it was stated that the Soviet Government reserves to itself the right to demand compensation from the Government of the USA for all losses after they have been accurately defined. I also requested that the obstacles to the exportation of equipment to the Soviet Union on orders distributed before the introduction of the new prohibitory regulations of the export of goods from the USA be removed and that an order be given concerning the issuing of appropriate export licenses.

Inasmuch as the Government of the USA has not removed the aforementioned obstacles to the exportation of equipment to the USSR, the Soviet Government has been compelled to resort to the defense of the legal interests of the Soviet organizations by withholding, at the time of the regular payment of interest to the account of the Government of the USA in accordance with the agreement of October 15, 1945,⁴ 1,300,000 dollars as a reserve for covering the losses of the Soviet organizations.

In the conversation with Mr. Lovett on July 1, 1948 I made the necessary explanations both regarding the nature of the said losses of the Soviet organizations and regarding the claims of the American firms against the Soviet economic organizations. Moreover, on September 1, 1948 the Soviet Purchasing Commission forwarded to the Department of State⁵ information concerning the said claims which was requested by the Department of State in its note of July 28, 1948.⁶

In connection with the continuing discrimination on the part of the Government of the USA in regard to the exportation to the Soviet Union of the equipment ordered, the losses of the Soviet organizations, both direct and indirect, are growing. The Soviet Government, therefore, not only does not consider the sum of 1,300 thousand dollars overdue, as was indicated in the aforementioned note of September 14, 1948, but also considers that it has the right in the future to make similar withholdings from the regular interest payments in accordance with the agreement of October 15, 1945 as a reserve for covering the losses of Soviet organizations which have arisen as a result of discrimination in regard to the exportation to the USSR of equipment ordered in the USA.

Accept [etc.]

A. Panyushkin

1. Foreign Relations, 1948, vol. iv, p. 1010.
2. Ibid., p. 994.
3. On the origins of the discontinuance of the shipment of materials to the Soviet Union which began in January 1947, see the documentation on lend-lease in Foreign Relations, 1947, vol. iv, pp. 653 ff., passim, and especially the memorandum of December 12, 1947, by Mr. Michael H. Cardozo of the Office of the Legal Adviser, ibid., p. 713.
4. For text of the agreement relating to the disposition of lend-lease supplies in inventory or procurement in the United States (the “Pipeline” agreement) signed at Washington on October 15, 1945, see Department of State, Treaties and Other International Acts Series (TIAS) No. 3662, or United States and Other International Agreements (UST), vol. 7 (pt. 7), p. 2819.
5. Not printed.
6. Foreign Relations, 1948, vol. iv, p. 1000.