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

660C.119/6–349: Telegram

The Acting Secretary of State to the Consulate in Geneva ¹

top secret

Washington, June 14, 1949—2 p. m.

661. Econ 393. For Porter. Urtel 532 rptd. Paris for Harriman 67 and Warsaw 17 Jne 3,² and Warsaw’s 858 rptd. Geneva 23 Paris for Harriman 123.³

Dept does not favor reconsideration export license Polish blooming mill because:

(1) US has right deny export licenses security reasons regardless hardship on Pol or US firm. In this case, no hardship proved for US manufacturing firm, and POLASCO as exporter is corp subj TTS laws, with legal recourse in US. Thus Pol argument invalid re fact goods ordered before licensing system in effect.

(2) case has been considered very carefully several times and decision reached that mill would constitute significant addition Sov block war potential.

(3) Lychowski argument that approval license wld assist Pol political independence is invalid because Pol has no political independence in any basic respect. Lychowski tactic is transparent, as obviously Sov policy wld desire Pol obtain mill.

(4) on relation mill to lend-lease and nationalization agreement, Dept policy is that settlements these issues must be considered secondary to major political-economic objectives such as natl security, and that we shld not yield to Pol position that settlement these issues depends on favorable export license policy.

(5) Pol economic situation requires western orientation its trade in any event, and mill wld make no difference in quantities Pol goods available for western countries.

(6) Satellite Govts attempt through so-called western oriented officials⁴ in effect mislead the West and satellite peoples and possibly such officials of more service to US policy for long term outside satellite governments than in them.

(7) even if Dept willing reconsider license for mill, would be impossible obtain agreement other agencies.

Webb

1. Repeated to Paris for Harriman as 2081 and to Warsaw as 378, This telegram was drafted in the Office of International Trade Policy, and Assistant Secretary of State for Economic Affairs Willard Thorp signed for Acting Secretary Webb. Most of the points contained in this telegram were previously presented in greater detail in a memorandum of June 7 from John D. Hickerson, Director of the Office of European Affairs, to Assistant Secretary of State Thorp, not printed (660C.119/6-349).
2. Not printed. It reported on a private luncheon meeting between Ambassador Harriman, Porter, and Jacek Rudzinski, Polish Deputy Representative to the Economic Commission for Europe. Rudzinski argued that a less restrictive U.S. export licensing policy toward Poland and Czechoslovakia would encourage a westward orientation by those countries and would strengthen pro-Western officials in the Polish Government. Porter subsequently discussed with Rudzinski the Polish request for an export license for a blooming mill. Porter was inclined to favor granting the license in order to strengthen pro-Western Polish officials, despite the security risk involved. Later, Polish ECE Representative Lychowski, who claimed to be acting on his own personal responsibility, intimated to Porter that a favorable action on the blooming mill license could lead to the resumption of conversations in Washington on compensation for nationalized property, lend-lease settlement, and other matters (6600.119/6–349).
3. In his telegram 858, June 9, from Warsaw, not printed Ambassador Gallman commented that the blooming mill sought by Poland had a direct relationship to Polish war potential inasmuch as it was designed to alleviate a current bottleneck to the increase of Polish steel production. Gallman advised against the reconsideration of an export license for the mill solely on the strength of Lychowski’s personal assurances (660H.119/6–949).
4. In his airgram 339, May 23, from Bern, not printed, Minister Vincent observed that so-called pro-Western officials in the satellite governments of Eastern Europe provided a facade over Soviet control which led the unwary to believe that those governments still contained democratic elements. Vincent recommended that Western-oriented officials would be more useful outside government than within (660C.60C31/5–2349).