396.1 LO/4–2550: Telegram

The United States Delegation at the Tripartite Preparatory Meetings to the Secretary of State


Secto 12. Third UK–US bilateral meeting Tuesday afternoon dealt with items three and four of agenda1 and policy toward Soviet satellites in East Europe and policy toward Yugoslavia.

Makins opened for British on item three. He divided his presentation into two parts, political and economic. He indicated that the political factors were largely imponderable. He stressed importance to UK of (1) Commonwealth and (2) The Colonies. In connection with Commonwealth he pointed out it was difficult to define its meaning or the substance explaining now going through evolution after absorbing additional members. As to colonies he stated they were strong point for Britain and a stabilizing factor in worldwide situation. Makins stated economic factors mainly ponderables. One was the existence of the sterling system. He pointed out it represented the largest areas of multilateral trade. Fifty percent of world trade is done in sterling and within the system there is free transferability of capital. Strength of sterling is regarded as index of stability and confidence in the UK. British believe that anything which weakens sterling area weakens common objectives. He pointed out intention of dealing with sterling balances was set forth in the Anglo-American [Page 866] financial agreement.2 In view of political developments which have been taking place in Indian subcontinent it is only now that British have been able to tackle question. He urged US to take such factors as these into account at all times in dealing with European or general economic questions. The strain on sterling was greatest on UK as center of system. UK had been able to carry on as it has only because supported by US, first by lend-lease, then by loan and then by ERP. To the end of enabling UK to get back on its feet in spite of setback great progress has been made but UK is still highly vulnerable. For example last year comparatively minor US recession gave UK structure considerable lurch. The UK economy is overloaded at present. It is carrying, for example, higher or as high a load as any country in the defense fields. There are also other heavy demands on its economy. It may be alleged that the UK is not making use of its resources which others would like to see. Here is question of government’s internal policy and civil servants can only say that those are policies for which voters have voted. British believe it is in their own interests and in general interests of the West to maintain sterling system and nurse it back to health. The UK alone would be a poor substitute for UK as center of sterling system. It is against this background that UK’s approach to west and to such questions of nondiscrimination and convertibility must be viewed. British are in Europe “up to our necks, always have been and always will be. If we go over our necks we might drown.” All of these factors are decisive in connection with consideration of agenda point four, i. e., roles each can play. “The US attitude considered ambivalent.” For example, steps taken by US since September have been of great assistance but on other hand in OEEC UK is in position of whipping boy. In conclusion Makins stated that by 1952 UK economy must be viable; if not UK will not be able to play part. In considering role which UK can play must bear in mind that there is no desire to shirk but that it cannot take on more than it can effectively perform.

Labouisse replied that in general we appreciate situation as outlined and that many of the frictions are not on questions of basic principle but arise from existing economic situation. Problems of this nature fall into three categories: (1) dollar shortage; (2) domestic expenditures; and (3) sterling system. After brief mention of specific problems under these three headings he pointed out that we cannot resolve any of these problems unless there is real understanding of our common [Page 867] objectives. For example, strong sterling is not desired, per se, but is an instrument for achieving of common objectives.

Point four UK–US relationships and roles then taken up. Jessup gave US views as set forth in position paper B 16–b.3

Strang commented Jessup’s statement went further than ideas briefly indicated by British at first meeting. Expressed opinion, however, that it seemed to lay sound foundation. Makins indicated his earlier statement was intended to be outline of UK and Commonwealth problem within framework of common objective. Strang and Makins indicated they did not off-hand differ from Jessup’s points other than on matters of emphasis. In regard to Europe he said the British considered that they had taken the lead and although they have not gone at the pace some in US would desire they have tried to maintain initiative. The possible point of clash in interests would be between Commonwealth cohesion and European association. It could be hoped that situation would not arise. But there was added difficulty that Commonwealth organization rests on an imponderable relationship which makes it difficult to define a specific Commonwealth policy toward European problems.

In general discussion, after presentation US view by Jessup, British indicated particular need for further consideration of (1) dual UK relationship to Europe and to Commonwealth and (2) possible postponement of economic viability after 1952. Possible divergence of views on these two points not excluded. Strang repeated that the British did not think union or federation was the right method. He said UK would not hold back on closer cooperation but would on federation and expressed hope that the Council of Europe would not press for such development. Strang said UK regarded itself part of Europe for certain purposes but could not make Europe its exclusive concern.

British had apparently adopted attainment of viability by 1952 as basis of their thinking and appeared unsure of nature of relationship if they had not regained their “independence” by that date. Furthermore effect of possible change in premise was something to which they wished to give further consideration. It was agreed that three sub-committees should be set up, one to look at UK–US collaboration in fields where economic considerations secondary, a second to examine specific economic and financial questions in the larger framework without, however, attempting to take such problems as petroleum, EPU and sterling balances out of present channels through which they were being considered, and a third on the relations of the UK to Europe (all to meet Wednesday a. m.).

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Second part UK–US meeting Tuesday afternoon opened with statement by Jessup on policy towards Soviet satellites as set forth in B 22–a omitting point seven.4 Bateman5 followed with brief description British measures of retaliation against satellite diplomats. He indicated restrictions under consideration in retaliation for Soviet limitation of British diplomats to 30 mile radius of Moscow. Various aspects of retaliation briefly discussed.6

Continuing consultation on subject generally recognized as desirable and question of machinery was raised. Jebb suggested a small group give consideration to the question. Desirability of having cooperation of French raised. As to cooperation on propaganda and broadcasting Hoyer Millar indicated he had discussed subject with Barrett7 in Department. After brief discussion consensus appeared to be that problem could be left to the information officers to bring about closer cooperation. As to exiles from satellite countries as greater numbers are in US British were prepared to leave initiative to US and Hoyer Millar stated he had so informed Department. It was suggested that in view of activities of committees in Paris it might be well to ask French what they were doing in this connection. Makins pointed out subject of east-west trade was not on the agenda and it was decided that he and Labouisse should give it consideration in their discussions.

Discussion of Yugoslavia was extremely brief. Bateman pointed out that Foreign Office views requested by State Department on what [Page 869] action might be taken in various eventualities had now been formulated. Except for matter of International Bank loan policies were felt to have been closely parallel. British understood that this matter would not come up for consideration again until next autumn. Stinebower pointed out that in order to keep Yugoslav economy afloat it was estimated between 20 and 30 million dollars would be needed. He said Black8 had indicated to him that when bank considered loan anew it would either make the whole available or nothing so if the UK would not contribute the whole project would fall.

Jebb suggested that in view of agreement on policy toward Tito a brief minute might be put before the Ministers indicating agreement on policy toward Tito and making it unnecessary for them to devote time to subject. Jessup suggested that minute might be one from tripartite group and Perkins suggested that question of further financial assistance might also be examined in tripartite talks under item eight, relations with Soviet.

Meeting concluded with arrangements for three subcommittees to meet Wednesday a. m. and Wednesday p. m. tripartite meeting taking up points on agenda in order given.

Sent Department Secto 12, repeated Paris 649.

  1. See agenda, telegram 1731, April 17, p. 835.
  2. For the text of the Anglo-American Financial Agreement, signed at Washington, December 6, 1945, see Department of State Bulletin, December 9, 1945, p. 907; for documentation relating to its negotiation, see Foreign Relations, 1945, vol. vi, pp. 1 ff.
  3. Infra.
  4. Not printed; it recommended that the United States obtain British and French concurrence in the following points:

    • “1. Maintain diplomatic representation in the Satellites as long as tolerable.
    • “2. Consult on any retaliatory measures.
    • “3. Maintain strong propaganda offensive, especially by radio.
    • “4. Make full use of UN forum.
    • “5. Bear in mind that Eastern European countries are part of European community.
    • “6. Make full use of Tito’s quarrel.
    • “7. Continuous adjustment of export controls to Eastern Europe.” (CFM Files: Lot M–88: Box 149: May FM Meeting B Series)

    An earlier draft of this paper, FM D B–22, dated April 7, and a subsequent draft, FM D B–22b, dated April 21, neither printed, bear the same recommendations, while a third draft, FM D B 22/1, also dated April 21 and based on FM D B–22a, not printed, was prepared for the NATO Council meeting (CFM Files, ibid.).

  5. Sir Charles H. Bateman, British Assistant Secretary of State for Foreign Affairs.
  6. In Secto 16, from London, April 25 (midnight), not printed, the United States Delegation raised the question “whether principles to be applied on retaliation re satellite actions should be studied jointly in addition to consultations before taking actions.” The Department of State advised in Tosec 16, to London, April 26, not printed, that joint measures were “likely to be more effective” than individual if agreement could be reached on their substance and timing. However, no procedure “wld prevent any nation taking whatever action it thought necessary in own interest.” (396.1 LO/4–2550)
  7. Edward W. Barrett, Assistant Secretary of State for Public Affairs.
  8. Eugene R. Black, President of the International Bank for Reconstruction and Development.