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

740.00119 Control (Germany)/10–1749: Telegram

The United States High Commissioner for Germany (McCloy)¹ to the Secretary of State

secret

Frankfurt, October 17, 1949—7 p. m.

3206. For SecState pass ECA and Commerce. Re German export controls. Conversation with Eeinstein² indicates need of further explanation of present situation here and of our attitude. Last cable received from you this subject is your 2002, October 7.³ We will keep you informed further developments in detail. Please spell out points on which you need more information.

1. Method of approach to German Government.

We earlier favored using MG regulation to retain security screening control in Allied hands because

(a) We did not feel that regulation as drafted contravened Jessup-Malik agreement;⁴ and

(b) We felt that such reserved powers as were to be exercised by Allies should be exercised openly and with public documentation, rather than by “confidential” methods which were certain to become more or less public. Given present situation and regulation one (law 53 revised) as it stands, we do not feel that we can allow entire basis for our supervision of certain exports to rest only on informal conversations as British now proposed. Germans would likely object, and rightly, to reorganizing much of their export licensing procedure in accordance with verbal request alone. We would have no adequate basis for complaints to government about individual or governmental shortcomings or connivances and also no continuity in case of change of government or chief personnel. Consequently, we favor as formal an approach to Germans as is now practical.⁵

2. Tripartite or unilateral approach to German Government.

We favor a tripartite approach to government because

(a) The restrictive export policy now, whatever its origin, is a western European policy as well as a US policy, and as such is not based only on 117 (d) of ECA act as British here claim;

(b) Since US economic policy in Europe favors common approach to European problems and a rapid integration of Germany into Western Europe, it is desirable for Germany to organize its export controls in coordination with other European countries, such as UK and France (and perhaps later other PC’s), rather than to have the US forced (as heretofore) to approach each nation separately;

(c) With a tripartite organization once set up we do not fear any sabotage of US goals since personnel would be solely or largely US.

3. Attitude of British.

British here state they do not oppose maintaining controls of security items to satellites (although they do oppose any controls over exports to OEEC countries; see paragraph six). They have been and remain opposed to establishing new control procedures, now necessary because of creation of German Government, through any means other than informal discussions with government, because of the Jessup-Malik agreement. Presumably they would agree to issuing formal instructions for foreign trade, and verbal suggestions for interzonal trade, but we have never pressed this point, since such a solution would be almost as unacceptable to US, and because of possible British compromise position outlined mytel 3011.⁶ We realize from your cables and from Reinstein that British Embassy Washington appears in agreement with you, but as stated mytel 3011, this agreement has not been reflected here.

4. Attitude of French.

French appear agreeable our position and draft letter (Toeca 976⁷), but reversed their position after originally agreeing to our strong draft military government regulation, so presumably can do so again.

5. Splitting AEC list.⁸

. . . . . . . . . . . . . .

6. Transshipment countries.

We realize difficulty in differentiating between OEEC countries. In choosing countries mentioned numbered paragraph two of draft letter (Toeca 976) we listed those most frequently considered in past to be transshipment areas. This list, not public, could be easily modified at any time as circumstances demanded. Series of cables ending with Berlin’s 690 to Department, May 11,⁹ indicate to us necessity of controlling Germany 1–A shipments originating in Germany, at least to Switzerland and Austria despite statements economic adviser quoted that series. British on October 14 indicated their unwillingness accept this method of handling transshipments because it constitutes a control not exercised in UK and France. We strongly desire no compromise on this point and feel that to fail to control transshipment means to fail to control exports. It is our opinion, however, that while we may properly be called on to check exports to Switzerland and Austria because of peculiarities in those countries, that some method of controlling such transshipments from other PC’s also should be inaugurated, and that Germany alone should not be expected to do this. Transshipments of German goods through other western European countries such as Belgium or Italy; should be controlled if possible through those countries; and from Germany only if that is not possible. OSR comments on this would be appreciated. Department realizes that if British will not agree on control of transshipments, establishment of full controls over interzonal trade may be delayed if Department suggests, we could attempt to get British agreement on approach to government on interzonal trade alone (as soon as method of communication has been worked out) so as not to delay entire schedule.

7. Berlin.

We are discussing extremely complicated Berlin problem with Berlin element and hope to have separate cable this subject soon. We feel that we need not only controls over exports from Berlin to foreign countries, but also control’s over shipment from western Germany to western Berlin: and direct or indirect controls over critical items manufactured in Berlin.¹⁰

8. Supervisory powers.

Under control system we envisage: our supervisory powers could only be exercised through (a) close supervision of central German approving agency; (b) frequent border spot checks; or (c) in bringing to attention of German Government promptly and with sufficient force any illicit 1–A shipments that come to our attention: and in pushing Germans to conduct proper investigation and prosecution. Alternative (a) alone is insufficient: because of large number of decentralized licensing agencies; alternative (5) is impossible because of personnel situation, although every effort will have to be made to have Germans strengthen their customs service. We feel that alternative (c) coupled with close liaison with German central agency is our best solution. We must recognize that in last analysis, given our basic policy toward new German Government, effectiveness of controls is dependent upon cooperation of German Government in licensing and border control fields, as well as the general efficiency of the government in these fields. However, draft letter to Germans is being amended to include request that combined list be forwarded to customs authorities for enforcement purposes.

9. Staffing problem.

Final size and location (in Office Economic Affairs) of US staff to handle problem not yet decided. Feeling now is that three US personnel plus US stenographer plus approximately same number German help (for unclassified filing) can probably handle export applications resulting from draft letter (mytel Toeca 976) and can work closely with German Government in setting up German organization. This staff would probably continue to operate for indefinite period (six months or longer) until efficiency and trustworthiness of German Government well established.

10. Departmental approach to British.

In line with paragraph three and six above: Since satisfactory agreement with British not yet reached, your approaching British Embassy would be appreciated, provided British position here is made extremely clear to Embassy. They have consistently opposed any method of approach to the Germans except through informal conversation, and so far as we know, the sole reason for this opposition is the fear of contravention of the Jessup-Malik agreement. This has been in spite of Robertson’s verbal assurance of cooperation in maintaining controls. In approaching Embassy, British attitude over controls to Switzerland mentioned paragraph six is a problem fully as important as method of approaching Germans.

11. 1–B shipments.

Our suggested handling of 1–B shipments (Toeca 976) gives Germans insufficient guidance in determining quantities of 1–B commodities which may be authorized, but we have no other solution than to refer each application to OSR or to Department which we wish to avoid for administrative reasons. Would appreciate your comments.

12. Please advise if you desire telecon for further clarification.¹¹

Sent Department 3206, repeated OSR Paris 929, London 212, Bern 81, Vienna 60.

McCloy

1. On September 21, 1949, the Federal Republic of Germany was established, and military government in the United States, British, and French zones of occupation of Western Germany was replaced by the Allied High Commission for Germany, with powers limited and defined by an Occupation Statute. John J. McCloy was the United States High Commissioner. For documentation on the establishment of the Federal Republic of Germany and of the Allied High Commission, see vol. iii, pp. 187 ff.
2. Jacques J. Reinstein, Acting Chief of the Division of German Economic Affairs.
3. Not printed.
4. During the spring of 1949 Ambassador at Large Philip C. Jessup and Soviet Deputy Foreign Minister Yakov Aleksandrovich Malik held a series of conversations at the United Nations in New York which eventuated in the Four-Power Agreement of May 4, 1949 on the lifting of the Berlin Blockade. One of the provisions of the agreement was reciprocal and simultaneous lifting of restrictions imposed by the Soviet Union and the Three Western Powers on communications, transportation, and trade between East and West Germany. For documentation on the Jessup-Malik conversations, see vol. iii, pp. 694 ff.
5. Telegram 2160, October 15, to Frankfurt, not printed, expressed the full support of the Department of State and the Economic Cooperation Administration for High Commissioner MeCloy’s position that an oral understanding with the West German Government regarding export controls would be unsatisfactory and that written instructions from the Allied High Commission would be necessary. It also reported that the British Embassy in Washington strongly supported the position and the British Foreign Office was in essential agreement (840.50 Recovery/10–1549).
6. Not printed. It reported that a draft letter on instruction to the West German Government regarding the imposition of security controls on exports to Communist-dominated states in Eastern Europe had been informally discussed with French representatives, who tended to agree, and with British representatives, who were generally agreeable to the substance of the draft letter but not the form of its transmission (840.50 Recovery/10–1249). The draft letter, the text of which was sent to Washington in telegram Toeca 976, October 12, from Frankfurt, not printed, outlined a program of export security controls in line with that of the United States, suggested governmental procedures to bring about implementation of the program, and enclosed American export control lists 1–A and 1–B.
7. See the preceding footnote.
8. Materials on the control of the export of commodities involved in atomic energy technology; for documentation on atomic energy policy, see vol. i, pp. 7 ff.
9. Not printed.
10. In telegram 2160, October 15, to Frankfurt, not printed, the Department of State and ECA suggested that the Allied Kommandatura for Berlin initiate an immediate survey and make recommendations on the question of exports from Berlin to Soviet controlled areas. The Department and ECA did not believe it would be politically advisable to include Berlin under the same regulations dealing with exports to Eastern Europe arid the USSR, but they saw no objection to a special system which restricted entry of security-controlled items to quantities needed for West Berlin’s requirements.
11. Telegram 2282, October 21, to Frankfurt, not printed, indicated the general concurrence of the Department of State and ECA to the points made in this telegram. An outline of steps to be taken in transferring administrative responsibility for the control of exports from the Allied High Commission to the West German Government was suggested (740.00119 Control (Germany )/10–1749).