Foreign Relations of the United States, 1950, Western Europe, Volume III

CFM Files: Lot M–88: Box 152: SFM Documents 1–40

Report of the Intergovernmental Study Group on Germany¹

confidential

London, September 4, 1950.

IGG(50)127 Final

Intergovernmental Study Group on Germany

report to the foreign ministers

The Study Group submits to the Ministers of Foreign Affairs the following reports on the various items in its terms of reference:

• 1. Reports on the revision of the Occupation Statute:

  (a) Substance

  (b) Form

• 2.

  (a) Formula regarding the legal status of the Federal Republic and interpretative minute.

  (b) Report on the status of treaties of the former German Reich.

• 3.

  (a) Report on Claims.

  (b) Report on other Economic and Legal issues arising out of the war.

• 4. Report on the Termination of the State of War.
• 5. Report on the implementation of Articles 18 and 19 of the Ruhr Agreement.
• 6. Report on the definition of German co-operation required to warrant the relinquishment of controls.

The recommendations made in these reports are based upon the following principles laid down by the Ministers in their declaration of the 14th May, 1950:—

(i) It seems necessary to enable a new phase to be opened in the relations between Germany and the Allies by building up the prestige and authority of the Federal Government and by considerably reducing the controls to which that Government is still subject. These controls should themselves be reduced to the minimum which is indispensable in order to safeguard the security and basic purposes of the occupation.

(ii) In building up the powers and prestige of the German Government, the framework of the occupation regime, based on supreme authority, should be respected. Relations between the Germans and the Allies should, therefore, continue to be governed by a Statute of an imposed, and not negotiated, character. The occupation cannot be placed on a contractual basis.

(iii) It is necessary to bring relations between Germany and the Allies back to normal, by eliminating the consequences of the state of war, on the understanding that the measures proposed should not be capable of being interpreted, in any way, as constituting a separate peace settlement with Western Germany.

In the preparation of its report, the Study Group has had the benefit of a large body of information prepared by the Allied High Commission concerning its experience under the existing Statute, as well as the views of the High Commission on measures which would have to be taken in certain cases to permit controls to be relaxed.

The Study Group has met with representatives of the Benelux countries from time to time to inform them of the progress of the work and to solicit the views of the Benelux countries with respect to certain matters of particular concern to them.

In view of the decision to convene a meeting of the Ministers in mid-September, it has been necessary to complete a report by the beginning of the month, thus shortening the period available to the Study Group by some weeks. In spite of the short time available, the Study Group has been able to discuss in substance all of the subjects referred to it, with the exception of the question of foreign interests in Germany. The Study Group has been able to submit agreed recommendations on all items of its Agenda, except certain points on the Occupation Statute and claims against Germany (see attached list). The recommendations, therefore, represent a wide area of agreement.

I. Summary of the Study Group’s Recommendations.

(a) Occupation Statute.

Separate reports are submitted on this item. The first is solely concerned with questions of substance and enumerates the points on which a reduction of Allied Powers, and an extension of the powers and competence of the German authorities, could be recommended.² The second concerns the form which the proposed changes of substance might take, and on this it has not been possible to submit agreed conclusions.³ This is a point of particular importance, to which the special attention of Ministers is drawn.

The recommendations of the Group in effect profoundly alter the present Allied powers and amount to a considerable increase in the powers and competence of the German authorities. Among other things they would give the Federal Government wide powers in the field of foreign affairs and enable it to establish diplomatic relations with other countries of the free world. They would also provide for drastic reduction of controls in the internal field. It is essential to obtain the benefit of any decisions that may be taken on these lines by giving them the best possible presentation from the viewpoint of German public opinion. The Study Group nevertheless recognizes that the method of such presentation raises difficulties, in view of the fact that in most cases Allied powers can be abandoned only in part or conditionally.

Two forms of revision have been proposed: the French and United Kingdom Delegations suggest a new revised Statute, accompanied by a declaration enumerating, in a positive manner, the new powers of the Federal Government. The United States Delegation has expressed its preference for altering the Statute by an instrument of revision which would set forth only the restrictions to be made in Allied powers or the areas in which the competence of the German authorities would be enlarged.

It has been agreed that each Delegation should prepare drafts on the basis of these two forms of revision, in order to enable the Ministers to reach a conclusion.

(b) Status of the Federal Republic and restoration of normal relations with the free world.

The Study Group has submitted a series of recommendations which, taken together, would provide a basis for the resumption, as far as possible, of normal relations between the Federal Republic and the countries of the free world.

(i) Status of the Federal Republic.

The Study Group has agreed on a formula defining the attitude of the three Governments vis-à-vis the Federal Republic and also an interpretative minute defining exactly the scope of this formula.⁴ This formula has been drafted in a way calculated to reinforce the prestige and authority of the Federal Government to the maximum extent possible whilst avoiding the considerable difficulties which would be raised, both from the point of view of the powers of the Occupation authorities and from that of relations with the U.S.S.R., by a recognition of the Bonn Government as the de jure government of all Germany. The formula also enables the Federal Republic to assume, on a provisional basis and with due regard to the limited territorial scope of its authority, the rights and obligations of the former Reich.

(ii) Treaties

In regard to the Status of the treaties of the former German Government, a proposal for a practical solution has been made, under the terms of which the various interested governments, as well as the Federal Government, would be invited to declare which of the treaties they would like to see revived.⁵ It would then be for the High Commission, after consultation with the Federal Government, to declare the treaties in question applicable to the Federal Republic.

(iii) Claims

It is also recommended that the Federal Government should assume responsibility for the pre-war external debt of the former German Reich.⁶ This would establish a basis for the provisional settlement of these obligations as part of a more general arrangement on claims. The Study Group has, however, been unable to submit agreed recommendations on a plan for dealing with Claims. Although there was agreement on certain aspects of the problem, it was not possible to agree on the basic question of the scope of the plan.

(iv) Termination of State of War

The Study Group considered that the formal continuation of the state of war with Germany in Allied municipal law constituted one of the principal obstacles to the integration of the German Federal Republic in the Western community. The Study Group recognised that, in view of the unconditional surrender and the assumption of supreme authority in regard to Germany, it was sufficient for the various Allied countries concerned to take the necessary action in municipal law, in order to settle this problem.⁷ It is accordingly recommended that such action be taken by the three Occupying Powers. It is hoped that this would be followed by similar action by other friendly powers.

Under the legal system in the United States, special problems arise in connection with the termination of the state of war with Germany. These are being investigated. If they cannot be solved, the United States may find it difficult to terminate the state of war without some qualification or limitation.

It should be emphasized that the termination of the state of war in the manner recommended above in no way affects the obligations of Germany nor the rights and powers of the Occupying Powers, and does not prejudice the peace settlement.

(c) Articles 18 and 19 of the Ruhr Agreement.

The Study Group has examined the question of the transfer of powers contemplated on Articles 18 and 19 of the Agreement establishing the International Authority for the Ruhr. It came to the conclusion that it was premature to reach a decision on this matter.⁸ It should be pointed out that the Study Group’s recommendations do not include any change in the provisions of the Occupation Statute concerning controls in regard to the Ruhr. The question of transfer therefore remains reserved for later examination.

The various recommendations outlined above are all inter-related and constitute a single programme.

II. Implementation of the Group’s recommendations.

The Study Group recognise that the programme outlined above should not be implemented until the Germans have given concrete proof of their good-will.

The measures of co-operation required of the Germans may be subdivided as follows:

(i) those involving undertakings e. g. in the case of equitable treatment of foreign nationals, Displaced Persons, and refugees and with respect to the Claims question;

(ii) those involving specific action, which would constitute a prerequisite for the abandonment of controls in certain fields.

The Study Group considers that the undertakings referred to in (1) above should be embodied in an agreement on the Petersberg model.⁹ It would be desirable that these undertakings be endorsed by the Federal Legislature, so as to make clear their binding character on the Federal Republic.

Every precaution should be taken to avoid giving the impression that the agreements constitute a first step in the direction of a negotiated Statute on the lines requested by Chancellor Adenauer in his recent memorandum.¹⁰ There should be no change in the present Statute before the Federal Government has given the above-mentioned undertakings. When these undertakings have been given the revision of the Statute will come into force. The reserved powers will be relinquished to the extent recommended in the various fields independently of one another, as and when the conditions laid down have been fulfilled.

It will be necessary for Ministers to determine when announcements shall be made of the terms of the revision of the Statute, and any other decisions to be made public.

III. Additional Decisions Needed From the Ministers.

(a) In the light of the recommendations which have been made by the Study Group, it is recommended that the Governments of the Occupying Powers review the Agreement on Tripartite Controls and the Charter of the Allied High Commission.¹¹

(b) There has as yet been no review of the Statement of Principles Governing the Relationship between the Allied Kommandatura and Greater Berlin.¹² The Study Group also recommends that the Ministers charge the High Commission with the review and revision of the Berlin Statement of Principles in the light of the decisions taken with respect to the Occupation Statute for the Federal Republic. The following principles should guide the High Commission in its work.

(i) For political reasons, the revisions of the Occupation Statute should be followed to the maximum extent possible in the Berlin Statement of Principles, while taking into account the special considerations arising out of Berlin’s position.

(ii) The reserved powers in the Statement of Principles which are not in the present Occupation Statute should also be revised so as to grant the maximum freedom to the Berlin City Government and people consistent with the special considerations mentioned above.

(c) The U.S. and U.K. Delegations recommend that the Foreign Ministers should consider what action should be taken in regard to the Agreement on Prohibited and Limited Industries, with reference to which the U.S. Delegation has submitted a proposal which is attached.¹³ The French Delegate stated that he would inform government of the recommendation and of the proposal.

IV. Further Work.

The attention of the Ministers is called to the fact that a certain number of questions raised in the present report are to be the subject of subsequent and more detailed study. In addition, the recommendations submitted by the Study Group involve decisions of principle which, if adopted, would require implementation. They would constitute directives to whatever bodies were charged by the Ministers with the further work required to place the recommended programme into effect.

The following recommendations of the Study Group require further work, at least initially, on the governmental level:

1. Preparation of a revised Occupation Statute or instrument of revision.

2. Further study of reserved power over foreign interests.

3. Drafting of German undertakings with respect to debts.

4. Preparation of a plan for handling claims.

5. Preparation of notifications concerning former German treaties.

6. Review of Agreement on Tripartite Controls.

7. Review of Charter of the Allied High Commission.

8. Implementation of Article 18 and 19 of the Ruhr Agreement.

In cases where further study at governmental level is not required, implementation of the Ministers’ decisions should, unless otherwise indicated in the Study Group’s recommendations, be undertaken by the High Commission. With respect to items 6 and 7, there should be close consultation with the High Commission.

If the Ministers decide that the Agreement on Prohibited and Limited Industries should be reviewed, this subject should also be dealt with on the governmental level.

[Annex]

List of Points on Which It Was Not Possible To Reach Agreement in the Study Group

confidential

London, [September 4, 1950.]

IGG(50)127 Annex

1. Restitution: The French Member considers that the exercise of reserve powers in the fields of external and internal restitution should cease simultaneously. The U.S. and U.K. Members recommend that the reserve powers be terminated as soon as existing programmes are completed. The French and U.K. Members urge that the term “cultural property”, in respect of which special arrangements are proposed, should be interpreted in a wide sense. The French member also recommends that the General Claims Law be applicable to non-residents.

2. Reparations: The French Member has entered a reservation stressing the psychological and political difficulties which would be raised by the omission of the word “reparations” in the revised Statute. The U.S. and U.K. Members recommend omission of this item, subject to retention of a strictly limited power for dealing with certain outstanding problems.

3. Foreign Affairs—General: The French and U.S. Members recommend the maintenance of the reserve power in this field but agree to delegate substantial powers to the Federal Government. The U.K. Member recommends the definite transfer of this power to the Federal Government subject to certain reservations. The reservations themselves are agreed by the Study Group with the exception of the following point.

4. Foreign Affairs—Diplomatic Representatives to Occupying Powers: The French and U.S. Members recommend that the Occupying Powers should not receive diplomatic representatives from the Federal Government, but official agents whose task will be limited to Matters of a non-diplomatic nature. The U.K. Member believes that the Federal Government should be allowed to appoint diplomatic representatives to the Occupying Powers; but these representatives would not deal with matters affecting the High Commission.

5. Foreign Trade: The French and U.K. Members recommend that powers be retained to secure observance by the Federal Republic of the principles of the General Agreement for Trade and Tariffs while Germany is not a member of the General Agreement for Trade and Tariffs or any successor body. The U.S. Member recommends that powers in this respect should only be retained until the Federal Republic becomes a Member of the General Agreement for Trade and Tariffs and assumes its obligations.

6. Form of the Revised Occupation Statute: The French and U.K. Members recommend that a new Occupation Statute be issued giving effect to the changes now proposed. The U.S. Member recommends an instrument of revision modifying the existing Statute and setting forth the changes in positive form.

7. Claims—Settlement Plan: The U.S. Member recommends that the Settlement Plan should deal only with external public and private debts arising out of pre-war obligations. The French Member proposes that the Plan should also deal with the settlement of certain wartime claims. The U.K. view is that the post-war economic assistance claims of the Government should be included in the Settlement Plan as well as compensation in local currency for war damage to United Nations property in Germany.

8. Claims—Occupation Costs: The U.S. Member proposes that these should be deferred until the general Peace Settlement. The French and U.K. Members consider that the matter should be discussed by the Foreign Ministers.

[Attachment 1a]

Report of the Intergovernmental Study Group on Germany on the Occupation Statute¹⁴

confidential

London, September 1, 1950.

IGG(50)98 Final

The Inter-Governmental Study Group on Germany submits to the three Foreign Ministers the following recommendations on the substance of the Statute:—

1. Preamble.

No change of substance should be made.

2. Paragraph 1.

No change of substance should be made.

3. Paragraph 2 (Preamble).

A reference to “the basic purposes of the occupation” and the right to request and verify information and statistics needed by the Occupation Authorities to carry out their functions under the Statute should be retained. This power will be exercised only for ensuring the basic purposes of the occupation.

4. Paragraph 2(a).

No change should be made.

The United States Delegation have put forward certain proposals for alterations in the Prohibited and Limited Industries Agreement, and further reserve the right to make proposals concerning the delegation of certain existing functions of the Civil Aviation Board to the German authorities.

5. Paragraph 2(b): Controls in regard to the Ruhr.

The Study Group think it expedient to retain the existing wording respecting controls in regard to the Ruhr for the time being in order to carry out the provisions of the Agreement on the Establishment of an International Authority for the Ruhr.

6. Paragraph 2(b): Restitution.

The reserved power should be terminated when the Occupying Powers and the Federal Government have completed the action set forth in Annex A.

[U.S./U.K.: Pending termination of the power, the Occupying Powers should limit their exercise thereof as indicated in Annex A.]¹⁵

[Fr: The French Delegation considers necessary that the exercise of Reserved Power in the fields of Internal and External Restitution should cease simultaneously.

It is understood that the principle of the right to Restitution remains unchanged until the peace settlement.]

7. Paragraph 2(b): Reparations.

The programme for deliveries of capital equipment and merchant shipping will be completed in all Zones by the end of 1950 and the draft High Commission law on divesting of title to property taken under these programmes and as German external assets, should have been enacted by that time. The disposal of foreign issued securities and currencies of German ownership located in Germany and the settlement of title and other matters connected with external assets now vested in the German External Property Commission cannot be completed for some time.

The United States and United Kingdom Delegations accordingly recommend that a strictly limited power be retained for the sole purpose of dealing with these matters.

The French Delegation stress the psychological and political difficulties which would be raised by the omission of the word “reparations” in the revised Statute. They consider that there would in fact be a risk of its omission being interpreted as a renunciation of an ultimate validation of Allied rights at the time of the peace settlement.

8. Paragraph 2(b): Decartelisation and Deconcentration.

Upon the completion of Allied programmes to achieve the reorganisations contemplated under High Commission Law 27¹⁶ and the liquidation of I. G. Farben Industries A. G., reorganisation of the former Reich-owned motion picture industry and the Grossbanken, and upon the completion of other actions which at the time of the revision of the Occupation Statute may be called for under laws adopted by the High Commission or may have been initiated through legal process taken under existing laws, the reserved power over deconcentration should be eliminated.

Upon the enactment of satisfactory legislation by the German Federal Government, the reserved power over decartelisation should be eliminated. This legislation should include provision for prevention of new concentrations of economic power.

9. Paragraph 2(b): Non-discrimination in Trade Matters.

Recommendations are contained in Section 16 below.

10. Paragraph 2(b): Foreign Interests in Germany.

In the limited time available, it has not been possible to consider this question fully. It is recommended that the Foreign Ministers should give instructions for the further consideration of the questions involved in order that recommendations may be made to Governments as to the undertakings to be secured from the Federal Government and the extent to which reserved powers in this field could be modified or terminated in the light of such undertakings. If approved by the the Governments these arrangements should be put into effect at the time of the relaxation of controls.

11. Paragraph 2(b): Claims against Germany.

The matter is still under consideration and accordingly no change can be recommended at this time.

12. Paragraph 2(c): Foreign Affairs.

The Federal Government should be authorised to establish a Ministry of Foreign Affairs and to conduct diplomatic relations with foreign countries over as wide a field as possible. The foregoing is subject to:—

[Fr. and U.S.: the maintenance of Allied reserved power in this field, whose exercise would be restricted as set forth below:

U.K.: the reservation of Allied powers as set forth below:

(a) Establishment of Diplomatic Relations.

The High Commission should have the right of previous disapproval of the establishment of diplomatic relations. In general, it is not contemplated that the High Commission would disapprove the establishment of diplomatic relations with friendly countries.

(i) In the case of countries other than the Occupying Powers, representatives to be exchanged with the Federal Republic would have the diplomatic rank agreed upon by each of these countries with the Federal Government. Diplomatic missions in the Federal Republic would be accredited to the Federal Government. Foreign Governments would notify the High Commission of the appointment of such missions, which would have access to the High Commission in matters relating to its reserved powers. It would also be possible in exceptional cases for a mission to be accredited to the High Commission.

(ii) U.K.: The Occupying Powers would also receive diplomatic representatives of the Federal Government and the rank or status of these representatives would be determined by agreement between the Occupying Powers and the Federal Republic. These representatives would not deal with matters affecting the powers of the High Commission. The three Governments do not intend to appoint diplomatic representatives to the Federal Republic and the High Commissioners would act in this capacity in matters which did not call for tripartite action.

(ii) U.S./Fr.: The Occupying Powers do not intend to appoint diplomatic representatives to the Federal Republic and the High Commission would be the channel for the negotiation of matters of a diplomatic and political nature between the Occupying Powers and the Federal Republic. On matters of this character which did not call for tripartite action the individual High Commissioners would deal with the Federal Republic. The Occupying Powers would, however, receive official agents of the Federal Republic whose task would be limited to matters of a non-diplomatic nature, including informing their Government.]

(iii) Exequaturs for foreign consuls would be issued by the Federal Government. It would also be possible in exceptional cases for exequaturs to be issued by the High Commission.

(b) International Agreements.

The High Commission should retain the right of previous disapproval of international agreements.

The High Commission would not disapprove an international agreement between the Federal Republic and a friendly country, unless its provisions might prejudice the eventual peace settlement with Germany or unless they conflicted with the basic purposes of the occupation, with measures of the Occupation Authorities under the Occupation Statute, or with the terms of any agreement relating to or affecting Germany to which the Occupying Powers are parties.

The Occupying Powers should reserve the right:—

(i) to conclude, in exceptional cases and in regard to matters in which the Federal Government is not in a position to act, agreements binding the Federal Republic;

(ii) to take measures to secure observance by the Federal Republic of international agreements relating to or affecting Germany to which they are parties and of international agreements concluded by them on behalf of the Federal Republic; and

(iii) to take action concerning the treaty rights and obligations of the former German Government.

(c) Conduct of Foreign Relations.

The High Commission should not intervene in the ordinary conduct of foreign relations by the Federal Republic, but:—

(i) the Federal Government would be required to keep the High Commission informed of its negotiations with other countries;

(ii) the Occupation Authorities would have the right to intervene in negotiations on matters relating to their reserved powers;

(iii) in the case of countries with which the Federal Republic did not have diplomatic relations, the Occupying Powers would conduct these relations as necessary.

Relations with the U.S.S.R. or countries of the Soviet orbit would either be conducted directly by the High Commission or would be subject to the closest supervision and control.

(d) International Organisations.

The three Governments should support the Federal Republic for membership in as many international organisations as possible, under the terms of whose charters the Federal Republic would be eligible for membership. In the case of any technical organisations where the Federal Republic could not be represented, the Occupying Powers might act on its behalf.

(e) Radio Frequencies.

The Occupying Powers should continue to exercise authority in the matter of radio frequencies.

(f) Soviet Areas of Occupation.

The High Commission should make clear to the Federal Government that the Occupying Powers will maintain control of relations with Soviet areas of occupation in Germany and any authorities constituted therein.

(g) General Reservation.

None of the foregoing would affect the supreme authority of the Occupying Powers.

13. Paragraph 2(d): Displaced Persons and Admission of Refugees.

As soon as the High Commission considers that adequate action has been taken by the Government of the Federal Republic to assure the admission, care and protection of displaced persons and refugees, this power should be relinquished. A detailed statement of the action to be required of the Federal Government is attached (Annex B).

14. Paragraph 2(e): Protection of Allied Forces etc.

No change should be made.

15. Paragraph 2(f): Respect for the Basic Law and Land Constitutions.

This reserved power should be relinquished as soon as there has been established in the Federal Republic a judicial authority deemed by the High Commission to be capable of effectively upholding the civil rights of the individual as defined in the Basic Law.

16. Paragraph 2(g): Control over Foreign Trade and Exchange.

Powers in this field should be retained only to the extent necessary to accomplish the following purposes:—

(a) to maintain control over relations between the Federal Republic and countries within the Soviet orbit, and such other countries as may on security grounds be specified from time to time by the High Commission;

(b) to maintain, in the interest of security, control over trade in certain goods between the Federal Republic and any other country, including the indirect export of certain goods to the countries referred to in (a);

(c) to maintain control over relations between the Federal Republic and Berlin and the Soviet Zone;

(d) [Fr/U.K.: to ensure the observance by the Federal Republic of the principles of the General Agreement on Tariffs and Trade while Germany is not a member of the General Agreement on Tariffs and Trade or any successor body.]

[U.S.: to ensure that German trade is conducted in accordance with the principles of the General Agreement on Tariffs and Trade. Powers in this respect will be terminated at the time Germany becomes a member of G.A.T.T. and assumes its obligations under the Agreement.]

(e) to exercise controls in the field of foreign exchange in order to ensure that the Federal Government observes the principles and practices of the International Monetary Fund Agreement relating to exchange rates and international payments and transfers. The powers in this field, insofar as retained for this purpose, should be terminated when Germany becomes a member of the Fund, provided that its termination be so arranged as not to leave the Federal Republic free of obligations in respect of the exchange rate. Representatives of the three Governments should, in consultation with officials of the Fund, resolve the technical problems involved in this decision.

(f) to maintain broad supervisory controls over the foreign exchange policy and practices of the Federal Government in order to provide for an orderly settlement of claims against Germany, including claims arising from postwar economic assistance extended by the Occupying Powers.

17. Paragraph 2(h): Control over Internal Action.

This power should be terminated.

18. Paragraph 2(i): Prisons.

No change of substance should be made.

19. Paragraphs 3 Emergency Powers.

No change should be made.

20. Paragraph 4: Right of Federal Government and Land Governments to legislate in Reserved Fields.

No change should be made.

21. Paragraphs 5: Review of Legislation.

Any amendment of the Basic Law should continue to require the express approval of the Occupation Authorities before becoming effective. Land constitutions, amendments thereof, and all other legislation should be effective without review by the Occupation Authorities, but would be subject to repeal or nullification by them. The Occupation Authorities would not repeal or nullify legislation unless, in their opinion, it was inconsistent with legislation or other directives of the Occupation Authorities themselves, or the provisions of the Occupation Statute as revised, or unless it constituted a grave threat to the basic purposes of the occupation. Until such time as the Occupation Authorities relinquished the power reserved in paragraph 2(f) of the Statute, they would retain the right to repeal or nullify legislation on the ground that it was inconsistent with the Basic Law or a Land constitution.

22. Paragraph 6: Civil Rights.

No change should be made.

23. Paragraph 7: Occupation Legislation.

Legislation of the Occupation Authorities based on the reserved powers as modified by these recommendations should remain in force until repealed or amended by the Occupation Authorities.

Legislation of the Occupation Authorities based on the present reserved powers should likewise remain in force until the Occupation Authorities consider that it is no longer necessary or that it can be repealed as a result of the completion of the programmes with which it is concerned or following the promulgation of appropriate German legislation.

All other Allied legislation should be repealed by the Occupation Authorities on request from the appropriate German authorities. The Occupation Authorities might also authorise the German authorities to repeal such legislation.

24. Paragraph 8: Acts of the Occupation Authorities.

No change of substance should be made.

25. Paragraph 9: Review of Statute.

The Occupying Powers should in due course again review the occupation controls.

26. Implementation of Undertakings and Legislation.

It has been suggested in this report that it might be possible in various cases to terminate certain reserved powers in whole or in part upon the giving of satisfactory undertakings by the Federal Republic or the adoption by it of satisfactory legislation with respect to the subject matter of these powers. The Occupying Powers should retain the powers necessary to ensure compliance with the undertakings given by the Federal Republic, and to ensure the implementation of the legislation enacted by the German authorities and the maintenance of the essential features of such legislation.

Annex A

The Occupying Powers should limit the exercise of the reserved power to the following:

(a) Restitution by the Occupying Powers of looted cultural property not now under their control, until such time as the Federal Government makes suitable legislative, regulatory, and organisational arrangements to facilitate the further recovery of looted cultural objects and formally undertake to restitute looted cultural objects which may be recovered under these arrangements. [Fr/U.K.: the term cultural property must be understood in a wide sense.]

(b) Completion by the Occupying Powers of the present operations in respect to cultural property now under their control at the Cultural Collecting Points, which they will endeavour to effect by July 1, 1951. On the latter date, or as soon thereafter as possible, and contingent upon German fulfillment of the conditions set out in paragraph (a) above, any residual amounts of cultural property then remaining at these Collecting Points, the disposition of which has not been determined, should be transferred to the German Authorities for further disposition, and the responsibility of the Occupying Power for the Collecting Points should be terminated.

(c) Obtaining an undertaking from the Federal Government to transfer to the International Refugee Organisation, or, upon its liquidation, to such other organisation as may be designated by the Occupying Powers, all valuable personal property which may still be recovered in Germany, which is presumed to have been looted from victims of Nazi persecution within and without Germany and of which the owner or country of origin cannot be identified.

(d) Disposal of property not covered in paragraphs (b) and (c) above which is at present under the control of the Occupying Powers or included within their present programmes of restitution relating to ships (including wrecks and inland water transport craft), railway rolling stock and locomotives, and securities of German issue.

(e) Ensuring that the Federal Government enacts legislation to provide that, in respect to property of which the owner was illegally deprived during German occupation of the country where the property was located, the period prescribed by German law for acquiring good title through possession under claim of ownership will be extended by a period equivalent to that from September 1, 1939, to May 8, 1945. This legislation must also provide that any legal obstacles to the recovery of such property through judicial process are set aside pending the expiration of the extended period.

(f) Ensuring completion of the programme covered by the existing Allied internal restitution legislation, which should be maintained, subject to the right of the Occupation Authorities to enact such perfecting amendments and implementing regulations as they may deem necessary. This presupposes enactment of the amendments to the French Zone law discussed in the section on internal restitution in the High Commission’s report to the Study Group (HICOM/P (50) 121 (Final)).¹⁷

(g) Obtaining enactment by the Federal Government of a satisfactory General Claims Law providing for the restitution of certain rights of, and compensation for, victims of Nazi persecution. [Fr.: including non-residents.]

Annex B

Paragraph 2(d): Displaced Persons and Admission of Refugees

The action required of the Federal Government in connection with paragraph 2(d) would include the conclusion of international agreements, the enactment of legislation, the issuance of administrative regulations, and the allocation of German funds as necessary. These would cover the following points with respect to displaced persons and refugees in the territory of the Federal Republic:—

(a) Civil Status

(i) Legislation assuring adequate civil rights and nondiscrimination for displaced persons, German refugees and non-German refugees in Germany.

(ii) A declaration by the Federal Government concerning its obligations to the displaced persons and refugees under its jurisdiction.

(iii) A declaration by the Federal Government of its readiness in principle to adhere to the United Nations Convention on Refugees, and to the agreement establishing the United Nations High Commission for Refugees.

(b) Continuation of Programmes concerning Displaced Persons and Refugees

(i) Such undertakings and measures by the Federal Government as may be necessary to assure continued and effective operation of the International Refugee Organization (IRO), the United Nations High Commission for Refugees and Allied resettlement agencies, until termination of their work.

(ii) Such undertakings and measures by the Federal Government as may be necessary to assure adequate continued care of displaced persons and refugees.

(c) Admission of Refugees

(i) German refugees: Review by the High Commission of present German legislation to determine whether supplementary legislation and regulations covering admission of these persons is considered necessary if paragraph 2(d) is eliminated.

(ii) Non-German refugees: Enactment of pending legislation and review by the High Commission of present German legislation and agreements in this field to determine whether additional legislation or agreements are considered necessary to protect Allied interests in these persons.

If the High Commission, as a result of the foregoing review, considers that additional measures by the Federal Government in these fields are necessary, such measures should be included in the requirements for the elimination of this power.

(d) Compensation for Displaced Persons who have been victims of Nazi Persecution

The Federal Government should be required to ensure that General Claims legislation in the Federal Republic covers persons in this category adequately.

[Attachment 1b]

Report of the Intergovernmental Study Group on Germany on the Form of Changes Recommended in the Occupation Statute

confidential

London, September 4, 1950.

IGG(50)125

[Here follows a note by E. R. Warner, Secretary-General of the Intergovernmental Study Group, which indicated that this report had been approved at the eighth plenary meeting.]

The Study Group has given consideration to the question of the form in which the changes of the Occupation Statute should ultimately be embodied. Whilst the Study Group recommends the relinquishment of a large part of the existing reserved powers, there is only one of the reserved powers listed in the present Statute which could, in the opinion of the Group, be given up in entirety at the present time; this is the important reserved power in the field of internal action to the extent necessary to ensure use of food and other supplies in such manner as to reduce to a minimum the need for external assistance to Germany. Several of the powers must be wholly retained since they apply to vital security interests of the Occupying Powers and of Germany herself. In all other cases some part of the powers must be retained, either without limit of time or pending certain action.

2. It is agreed that the form in which these changes are ultimately embodied must be such as to make clear the substantial character of what it is proposed to delegate or transfer at the present time. Whilst it is necessary to preserve certain parts of Allied authority in a number of fields on the grounds explained above, this should be presented in such a way as to make the best impression on German public opinion and also to avoid any suggestion that large powers are being held back for purely administrative reasons, or for lack of confidence in the Federal Government itself.

3. Whilst there is no dispute as to the objective outlined in the previous paragraph, the Study Group did not reach a final conclusion as to the manner in which this objective should be attained.

4. The French and United Kingdom Members are disposed to favour a Revised Statute in which the limited reserved powers are set forth clearly, as in the case of the existing Statute. It is manifest that for the reasons explained above the Revised Statute would be longer than that presently in force. The French and United Kingdom Members consider that a new Statute revised on the lines now proposed would nevertheless be a much more acceptable document to the Germans. They believe that a clear statement of the powers as limited would be more likely to be appreciated than any alternative form of presentation, and that, particularly if accompanied by a suitable explanatory statement, the Revised Statute can be set out in a form which would make it fully acceptable to German opinion.

5. The United States Member on the other hand inclines to the view that the revision of the Statute should be effected in an instrument modifying the existing Statute. The instrument of revision would set out in a positive manner the way in which the Allied Authorities would in future restrict their powers and with respect to which the competence of the German Authorities would be enlarged. This would, in the view of the United States Member, enable the document to be presented in a manner which would emphasise the benefits of the changes to the Germans, and overcome the disadvantages resulting from issuing a second edition of the Occupation Statute which would necessarily reaffirm numerous restrictions.

6. The Study Group recommends that in the course of the meetings of the Foreign Ministers this matter should be considered in the light of their decisions on the substance of the changes which it is proposed to make.

[Attachment 2a]

Report of the Intergovernmental Study Group on Germany on the Status of the Federal Republic

confidential

London, August 30, 1950.

IGG (50) 103 Final

Status of Federal Republic

The Study Group recommends that before authorising the Federal Republic to conduct foreign relations, the Occupying Powers should agree on a formula defining the status of the Federal Republic, which, together with an Interpretative Minute, should be communicated to the German Federal Government. Agreed drafts of the formula and Interpretative Minute are attached.

I. Proposed Formula for adoption by the Foreign Ministers

The Governments of the United States, United Kingdom and France reaffirm that the peaceful reunification of Germany under a democratic regime, as now embodied in the Federal Republic, remains the ultimate object of their policy. They recognise that, pending such reunification, the Government of the Federal Republic of Germany is the only German Government legitimately constituted which can speak for Germany and represent the German people in international affairs. They consider therefore, that pending the final peace settlement and without prejudice to its terms, it is the only Government entitled to assume the rights and obligations of the former German Reich. They also recognise that the limitations on the territorial jurisdiction of the Federal Government restrict its capacity effectively to exercise all such rights and to perform fully such obligations. The powers, rights and obligations of the Federal Republic are subject to the supreme authority of the Occupying Powers and actions taken by them thereunder.

II. Agreed Interpretative Minute

The above formula is based on the premise that the German state continues to exist, and expressly reserves the supreme authority of the Occupying Powers. The latter may determine, with the effect of binding the Federal Republic but not other countries, what are the rights and obligations of the Federal Republic, and they may determine the manner in which and the extent to which the Federal Republic may exercise these rights and fulfill those obligations.

The formula in no way affects the situation in Berlin, since it expressly recognises that the Federal Republic’s jurisdiction in Germany is limited to its territory, and it avoids any mention of the Soviet zone of Germany.

The formula recognises the provisional character of the Federal Republic by stating that the status which is recognised is pending “the peaceful reunification of Germany.” It does not, therefore constitute recognition of the Government of the Federal Republic as the de jure government of all Germany.

It is agreed that the Occupying Powers will support the Government of the Federal Republic as the only Government capable of assuming the rights and obligations of Germany in existing international organisations to which Germany belonged.

[Attachment 2b]

Report of the Intergovernmental Study Group on Germany on the Status of Treaties of the Former German Reich

confidential

London, September 4, 1950.

IGG(50)115 Final

[Here follows a note by Secretary-General Warner which indicated that this paper had been approved at the eighth plenary meeting of the Intergovernmental Study Group.]

The Study Group makes the following recommendations relative to the treaty rights and obligations of the former German Reich:

The three Occupying Powers should invite the Federal Republic and all interested Powers to make known to the High Commission the treaties of the former German Reich to which they desire that effect should now be given as between the Federal Republic and the country concerned. The High Commission will then, unless it disapproved, declare such treaties applicable to the Federal Republic and binding upon it, provided the Federal Republic and the other interested governments so desire. If there is any objection on the part of the Federal Republic to a request by an Allied country to put a treaty into operation, the Occupation Authorities will, after a period of six months from the receipt of the request, decide what action should be taken, having regard to (a) their responsibility for the protection of Allied interests, and (b) safeguarding the interests of the Occupation.

In the case of multilateral conventions the above procedure will apply, but if reciprocity is the basis of the convention it will only be binding as between the Federal Republic and such of the other signatories as agree.

Any action of the Occupation Authorities referred to above in no way prejudices the final peace settlement and will not have the effect of abrogating or modifying any treaty obligations of the former German Reich not expressly covered by such action.

[Attachment 3a]

Report of the Intergovernmental Study Group on Germany on Claims

confidential

London, September 4, 1950.

IGG(50) 113 Final

[Here follows a note by Secretary-General Warner which indicated that this paper had been approved at the eighth plenary meeting of the Intergovernmental Study Group.]

1. The Intergovernmental Study Group on Germany, in accordance with its instructions, has considered possible plans for handling outstanding claims against Germany and the Germans. Its recommendations, which are set out in the attached paper, are summarised in this report. Certain features of a settlement plan have been agreed, but basic differences as to the scope of the settlement still remain unsolved.

2. The three Delegations agreed that there should be an orderly debt settlement on a basis to be agreed by the three governments and of such a character as not to dislocate the German economy. The implementation of the plan should be subject to suitable controls. They also agree that it would be necessary as a part of such a debt settlement for the Federal Republic to undertake responsibility for the German prewar external debt and in respect of the postwar economic assistance to the Western Zones, as well as to give an assurance of co-operation in the working out and implementation of a settlement plan. It is understood that proper regard will be paid to the general situation of the Federal Republic, including the limitations on its territorial jurisdiction. The arrangements should be provisional and subject to revision in the peace settlement.

3. All Delegations are agreed that the settlement plan should deal with external public and private debts arising out of pre-war obligations, and that further consideration will be given to the question whether it should also deal with certain other pre-war debts to foreigners which may not be strictly classifiable as external.

4. The main difference is as to whether anything further should be included in the plan.

The United States view is that nothing further should be included in the settlement plan. To the extent that war claims have not been dealt with under previous inter-Allied agreements on reparation, their position should not be prejudiced. A partial local currency settlement of claims in respect of postwar economic assistance would not be precluded by the plan.

The French Delegation agrees with this last United States proposal regarding the post-war claims. They further believe that the plan should either provide for, or not preclude in principle or in fact, the settlement of claims arising during the war against German nationals, claims in connexion with social insurance operations, and certain claims in respect of German currency held abroad.

The United Kingdom view is that post-war economic assistance claims should be included in the plan in parallel with claims arising before the war, and that the plan should include limited compensation in local currency in respect of war damage to United Nations property in Germany.

5. The three Delegations agree that external occupation costs is a subject normally dealt with in a peace treaty but have not been able to agree as to whether any decision respecting such claims is called for at the present time.

[Here follows a three-section plan for handling the outstanding claims against Germany and the Germans.]

[Attachment 3b]

Report of the Intergovernmental Study Group on Germany on Other Economic and Legal Issues Arising Out of the War

confidential

London, September 4, 1950.

IGG(50)122 Final

[Here follows a note by Secretary-General Warner which indicated that this paper had been approved at the eighth plenary meeting of the Intergovernmental Study Group.]

Under item 3 of its agenda the Study Group has considered, in addition to the problem of claims, what other economic and legal issues arising out of the war require attention at this stage and how they should be handled.

2. The following subjects have been discussed and remitted to the Allied High Commission for appropriate action:—

(a) Enactment of appropriate legislation to extend the Statute of Prescriptions and Limitations. This should be carried out either by the Federal Government or, failing action by them, by the High Commission.

(b) The final drafting and enactment by the Allied High Commission of the law for divesting of title to property taken as Reparations or by way of Restitution.

3. The following matter, which is also referred to in the Study Group’s paper on the termination of the State of War,¹⁸ will call for further investigation and action by the High Commission as soon as Ministers have approved the recommendations in that report:—

Consultations between the High Commission and the German authorities as to the elimination from German domestic law of any reference to the state of war and its consequences respecting Allied Governments and their nationals.

4. The following questions, related to the protection of foreign interests in Germany, will also require further investigation in the context of the continuing study of the problem of foreign interests recommended in para. 11 of the Study Group’s report on the Occupation Statute:¹⁹

(a) Investigation of the following two matters relating to prewar contracts and negotiable instruments:

(i) the effect of war in German law;

(ii) the advisability of following the precedent of the Italian Peace Treaty in such cases.

(b) Forced transfers of property located in Germany not covered by Restitution Laws.

(c) Trade marks and trade names.

(d) The right to participate in capital issues.

(N.B. Preliminary study has already been given to the above four questions).

(e) Protection of foreign interests under schemes for nationalisation, socialisation or land reform, including the establishment of machinery to ensure that the compensation of foreign interests is prompt, adequate and effective.

(f) Protection of foreign interests against special taxes imposed for the specific purpose of meeting charges arising out of the war.

(g) Procedure for the settlement of disputes regarding foreign interests in Germany.

(h) Methods of ensuring protection of foreign interests in all customary aspects of trade and establishment matters.

The further investigation of the foregoing questions should be undertaken by the High Commission in cases (a) (i), (b), (c) and (d), and at Governmental level in the case of (a) (ii), (e), (f), (g) and (h).

5. The United States Delegation is of the opinion that there should also be investigation whether any action should be taken in Germany to prevent challenges being made in municipal courts outside Germany to acts of the Allies during the war and the occupation period or of neutrals at the request of the Allies.

[Attachment 4]

Report of the Intergovernmental Study Group on Germany on the Termination of the State of War

confidential

London, August 29, 1950.

IGG(50)93 Final

The Study Group found itself in agreement that the continuance of the technical state of war with Germany in the sphere of the domestic law of the Allied countries constituted an obstacle to the policy adopted by the Three Powers to incorporate the German Federal Republic as a peaceful member of the European community. A necessary element in the implementation of this policy is that German nationals should cease to be treated in law as enemy nationals.

2. The Study Group recognized that the problem of the termination of the state of war must be dealt with in the light of the following principles:

(a) Neither the occupation nor the supreme authority exercised by the Occupation Powers in Germany is dependent on the continuance of the state of war.

(b) The termination of the state of war should not be given a form that might be interpreted as a separate peace settlement with Western Germany.

3. In the light of these principles, the Study Group agreed that in view of the unconditional surrender of Germany and the assumption of supreme authority on the 5th June, 1945, action to terminate the state of war may now proceed in the domestic spheres of the three Occupying Powers and of any other Allied Power. It will accordingly be legally sufficient that each of these Powers take unilaterally any measures necessary to terminate the state of war insofar as it still exists in the sphere of its own domestic law, and to put an end to its consequences. As soon as this action has been taken the matter will have been disposed of, as far as each of these Powers is concerned.

4. The termination of the state of war in this manner in no way affects Germany’s obligations and in no way prejudices the peace settlement. It has no relation to and no effect upon the rights and status of the Occupation Powers in Germany which rest upon the complete defeat of Germany, the unconditional surrender and the assumption of supreme authority, rather than the belligerent occupation of enemy territory in time of war. These principles should be emphasized in any public statement issued on the subject.

5. The French and United Kingdom Governments are in a position to take the necessary action at any time. The United States Government, on the other hand, will not be ready to do so until certain necessary legislation has been enacted, which may not be possible until some time in 1951. The action need not be taken simultaneously in the three countries, although it would be desirable to coordinate such action as closely as possible.

6. In these circumstances the Study Group has decided to recommend to the three Foreign Ministers that they should make a declaration announcing jointly the intention of their Governments to proceed, as soon as possible, individually and unilaterally, in accordance with their constitutional procedures, with the necessary domestic measures. These measures would apply to the whole of Germany and to all German nationals. The timing of any announcement should be considered in relation to the action to be taken by the Governments on this and other items of the Study Group’s agenda and to any action required of the German Federal Government in this connection.

7. It is hoped that other nations will take similar steps in accordance with their various procedures to terminate the state of war existing between them and Germany.

8. The Study Group considers that action must be taken in any case to eliminate from German Domestic law any reference to the state of war and its consequences respecting Allied Governments and their nationals. It recommends that there should be early consultations to this end between the Allied High Commission and the German Federal Government. The necessary measures will then be taken as soon as possible, and in any event before the occupying Powers terminate the state of war in their domestic law.

[Attachment 5]

Report of the Intergovernmental Study Group on Germany on Articles 18 and 19 of the Ruhr Agreement²⁰

confidential

London, August 30, 1950.

IGG(50)76 Final

[Here follows a note by Secretary-General Warner which indicated that this paper had been approved at the sixth plenary meeting of the Intergovernmental Study Group.]

The Study Group have given preliminary consideration to Item 5 of the Agenda (Articles 18 and 19 of the Ruhr Agreement). They believe that it would be premature to determine at the present time the most appropriate arrangements for the implementation of Articles 18 and 19 of the Agreement for the Establishment of an International Authority for the Ruhr.

These articles envisage that certain of the powers, now exercised by the High Commission through the agency of the Coal and Steel Groups, will be transferred from Occupation Authorities to the I.A.R., or the Military Security Board, or to some other body created by international agreement. There was general agreement in the Study Group:

(i) that some of these powers required closer definition in the light of the experience of the High Commission;

(ii) that none of them could in practice be relinquished by the High Commission until the unit companies had been established under Law 27 which will at least take a number of months;

(iii) that it will be possible to take better informed decisions regarding the transfer of powers described in Articles 18 and 19 of the Ruhr Agreement, and particularly Article 19, when the scope and functions of any High Authority set up as a result of the French proposal for pooling the coal, iron and steel production of France, Germany and certain other Western European countries are determined.

Meanwhile, however, the Study Group wish to draw the attention of Ministers to the fact that the modifications proposed by them in the Occupation Statute would not affect the clause respecting controls in regard to the Ruhr and therefore would not prejudice the exercise of the present powers in this field by the High Commission, nor the ability of the Governments, if they so determined, to transfer these powers to the I.A.R., or some other body created by international agreement.

[Attachment 6]

Report of the Intergovernmental Study Group on Germany on the Definition of German Cooperation Required to Warrant Relinquishment of Controls

confidential

London, September 4, 1950.

IGG(50) 126 Final

[Here follows a note by Secretary-General Warner which indicated that this report had been approved at the eighth plenary meeting of the Intergovernmental Study Group.]

Among the tasks assigned to the Study Group is that of examining and reporting on the definition of German Co-operation required to warrant the relinquishment of controls. It is essential that the German Federal Government and all German authorities should understand from the outset that they cannot expect concessions from the Occupying Powers without active co-operation on their part in the common enterprise of developing the power and influence of the free countries of the world.

It is emphasised that the Study Group’s recommendations for revision of the reserved powers in the Occupation Statute, for establishing and raising the status of the Federal Republic in world affairs, for terminating the state of war, and in respect of other measures proposed, together with the measures of German co-operation referred to below, should be regarded as one whole. It should also be clearly understood that the measures proposed for extending German authority are the maximum that will be offered at the present time and are not subject to increase through negotiation. The Federal Government should freely offer to undertake measures of co-operation proposed as their contribution to the common objective of incorporating the Federal Republic as a peaceful member of the European community.

The measures of co-operation required fall into two broad categories.

In the first place the German Federal Government should be required, as a necessary counterpart to the measures as a whole which have been proposed by the three Occupation Powers for increasing the freedom and authority of the Federal Government, to give certain general undertakings. Such an undertaking should be given regarding the equitable treatment of foreign nationals in the Federal Republic, regarding the treatment of displaced persons and refugees. In this connexion it is recommended that the High Commission be requested to examine the question whether an undertaking should also be obtained from the German Authorities regarding the cultural rights, language and civil rights of the Danish speaking minority in Land Schleswig-Holstein. The Federal Republic should also be required to give various undertakings in the field of debts and claims as indicated in the Study Group’s report on this subject, including an assurance of co-operation in the working out and implementation of a settlement plan.

In the second place, action will be required of the German Federal Government in particular fields as a necessary condition of the termination of the corresponding reserved powers. These fields are those mentioned in the Study Group’s report on the changes to be made in the Occupation Statute:—

Restitution

Decartelisation

Deconcentration

Displaced Persons and refugees

Respect for the Basic Law and Land Constitutions

Foreign Trade and Exchange.

The foregoing measures of co-operation recommended by the Study Group are those which arise in connection with the subjects which it has been directed to examine.

In addition the Foreign Ministers may wish to consider whether any undertakings of a broader character should be required of the Federal Government.

[Unnumbered Attachment]

Report of the Intergovernmental Study Group on Germany on the Revision of the Prohibited and Limited Industries Agreement

secret

London, August 30, 1950.

IGG (50) 108

Position of United States Delegation

1. The nations of the West are agreed in the necessity for strengthening the common defense as rapidly as possible. They likewise recognize that the production of defense equipment will place a heavy burden on their respective economies. Moreover, the impact of this burden will be particularly severe at the present time when industrial production in the West is already operating at near capacity. Shortages will undoubtedly ensue as, in fact, they already have in the United States in critical sectors such as steel. These shortages may aggravate the existing inflationary forces and make them more difficult to control.

2. In view of the foregoing, it is essential that provision be made for the utilization of the industrial resources of Germany in support of the defense program of Europe and the Atlantic Community. The United States does not envisage that Germany would be authorized to fabricate ordnance items. On the other hand, it feels that Germany should be empowered to produce primary and other industrial commodities and articles which will be required in the defense effort. The most important of these commodities at the present time is steel, but there are others also, such as ball bearings, aluminum and chemicals. These commodities should either be made available for export from Germany for fabrication in other Western countries into supplies required for the common defense, or alternatively might be fabricated within Germany into non-ordnance items necessary for adequate defense, such as, for example, trucks.

3. If we are to avail ourselves of the capacity of Germany to produce these commodities, without modification of the PLI Agreement, the additional demands would be at the expense of her essential domestic requirements with consequent economic and political repercussions inside Germany. In general, the limitations in the Agreement were based upon the assumption that the production of these items would cover the essential domestic requirements of Germany.

4. There are, of course, other considerations which bear upon the PLI Agreement and which, in the view of the United States, reenforce the case for modification. In the circumstances and taking into account the present relations, and the anticipated closer relations between Germany and Western Europe, the United States proposed that the three Occupying Powers proceed immediately to a study of the PLI Agreement with a view to its revision in accordance with the following principles:

a. The elimination of restrictions which have proved to be unduly burdensome in administration.

b. The elimination of restrictions which have proved to be excessive in terms of security requirements viewed within the framework of the present relations between Germany and the Occupying Powers.

c. The provision of flexibility in the Agreement to permit the use of the German industrial potential for the production on non-ordnance items required for the defense of the West.

5. The three Governments will require advice and expert assistance from the High Commission to carry forward the revision of the Agreement in accordance with the first two principles. Revision of the Agreement in pursuance of these three principles should result in substantial changes in the present provisions affecting steel, shipbuilding, in particular the production of ships for export, ball and roller bearings, chemicals, synthetic ammonia and chlorine, and, also, certain controls in regard to machine tools and electronic valves, and possibly others.

6. Decision is required by the Foreign Ministers at their forthcoming meeting to authorize the High Commission to take such action as may be needed for the production of steel, and other materials necessary for defense, while detailed discussions covering modifications of the Agreement itself are going forward.

7. The revision of the PLI Agreement should form part of the arrangements to be worked out with the Federal Government in connection with the relaxation of controls under the Occupation Statute.

1. Attached to the source text was a cover sheet, dated September 7, not printed, which Indicated that this paper was designated Document 15 [D–3] when it was submitted far the consideration of the Foreign Ministers. Another copy of the report in file 396.1–ISG/9–550 bears the signature of Massigli, Gainer, and Holmes, the representatives to the Study Group of France, the United Kingdom, and the United States, respectively. The report was discussed by the Ministers at their third and fifth meetings on September 13 and 18.
2. IGG (50) 98 Final, attachment 1a, p. 1255.
3. IGG (50) 125, attachment 1b, p. 1264.
4. IGG (50) 103 Final, attachment 2a, p. 1266.
5. IGG (50) 115 Final, attachment 2b, p. 1267
6. IGG (50) 113 Final, attachment 3a, p. 1268.
7. IGG (50) 93 Final, attachment 4, p. 1271.
8. IGG (50) 76 Final, attachment 5, p. 1272.
9. For text of the Petersberg Protocol, dated November 22, 1949, see Foreign Relations, 1949, vol. iii, p. 343.
10. Of August 29; scheduled for publication in volume iv.
11. For text of the Agreement as to Tripartite Controls, see Foreign Relations, 1949, vol. iii, p. 181; for the text of the Charter of the Allied High Commission, see Germany 1947–1949: The Story in Documents (Washington, Government Printing Office, 1950), pp. 398–406.
12. For text of the statement of principles, see Germany 1947–1949: The Story in Documents (Washington, Government Printing Office, 1950), pp. 324–326.
13. For text of the Prohibited and Limited (Restricted) Industries Agreement, see ibid., pp. 266 ff. For the text of the United States proposal, see IGG (50) 108, unnumbered attachment, p. 1275.
14. Attached to the source text was a cover sheet, dated September 4, not printed, which indicated that this report was approved at the 8th plenary meeting of the ISG.
15. The brackets in this and the following attachments are in the source texts.
16. For the text of High Commission Law No. 27, Reorganization of German Coal and Iron and Steel Industries, see Laws, Regulations, Directives, and Decisions of the Allied High Commission for Germany, from September 21, 1949 to September 20, 1950 (Bonn–Petersberg, Allied General Secretariat, undated), p. 155.
17. Not found in Department of State files.
18. Attachment 4, below.
19. Attachment 1a, p. 1255.
20. For the text of the Ruhr Agreement, see Foreign Relations, 1948, vol. ii, p. 484.