396.1–ISG/6–1250: Telegram

The Secretary of State to the Office of the United States High Commissioner for Germany, at Frankfort


4182. Since the return of the delegation from the London conference,1 we have been considering work which is to be done by the Intergovernmental Study Group on Germany. The group will begin its work in London with Ambassador Douglas as the U.S. representative, presumably on June 26.2

A number of papers on the various matters which fall within the terms of reference of the Study Group are in preparation within the Dept. The purpose of this telegram is to indicate the gen lines of the Dept’s thinking on this work and solicit your comments.

It is our view that the work of the Study Group shld be conceived primarily in terms of determining the manner in which the position of Germany and Allied relations with the Germans can be prepared for the next major changes in the development of our German policy. In accordance with the decision of the Ministers conference, we must look forward to a further relaxation of our controls over German affairs. The manner in which this relaxation will take place, and the extent, speed and direction of the changes are one of the most important tasks within the terms of reference of the Study Group. Conclusions which may be reached on this subject will depend in part upon an analysis of what we are doing in Germany and the success which [Page 739] we are having in obtaining our objectives. They will also depend upon developments in the coming months, notably the course of the negotiations of the Schuman proposals,3 the entry of Germany into the Council of Europe and other events which will have an important bearing on the general political atmosphere in Europe and on the state of mind of the Allied countries with regard to changes in the German position. Possible Soviet moves will also affect our thinking.

It is our feeling that care must be taken in the conduct of the negotiations to avoid taking positions too soon and therefore freezing separate national views prematurely. We are therefore inclined to favor the devotion of the early part of the summer to an analysis of the problems involved in relaxing controls without an attempt to reach definitive conclusions. This analysis shld, in our judgment, be conducted by the High Commission. Our ideas as to how it shld be developed are indicated in more detail below.

Whatever the decisions may be with respect to the controls over German internal affairs, it seems clear that we must look forward to the resumption of the conduct of foreign relations by the Germans. This will presumably be closely related to the termination of the legal state of war. Our present thinking does not contemplate the possibility of the abandonment of Allied controls in the field of foreign relations, although the Germans wld be allowed to conduct their foreign relations directly. This wld assure HICOM review of bilateral and multilateral agreements concluded by Germans and execution of agreements made by the Allies on behalf of or binding Ger.

Subject to these reservations, however, which wld be designed partly to protect our position respecting the ultimate peace treaty and partly for other reasons, the Germans wld in fact necessarily have extremely broad latitude in the determination of their foreign policy and with respect to a variety of matters of great interest to the Allies. The reemergence of Germany on the international scene and its participation in international organizations to the fullest extent possible requires (when taken in conjunction with the termination of the state of war) a prior determination on numerous matters affecting German relations with the Allies. The legal status of Germany’s prewar treaty obligations must be determined. The status of the financial obligations of the Reich and the question of claims against Germany must be considered. Eventually these matters will probably have to be the subject of agreements with the Germans.

These questions raise the issue of the status of the Federal Republic both as an entity in international life and in its relation to the former Reich. While we are bound to maintain the position of Allied supreme authority and while we cannot take any position which admits [Page 740] the legal division of Germany, we must evolve concepts which will permit the Federal Republic to function effectively in international relations as the only government with the right to speak for the German people.

These subjects cover items 2, 3 and 4 of the Terms of Reference of the Study Group. It is our view that discussion of them shld center in London. However, the work on them will have to be conducted in close consultation with the High Commission.

The Prohibited and Limited Industries Agreement is not specifically mentioned in the Terms of Reference of the Study Group but we have considered it to be covered and will press for its review by the Group. The question of the steel level of production has already been referred to the High Commission for study. Of the other subjects which wld come up for review the question of shipbuilding is most urgent. This question cld be most usefully discussed in London. We therefore believe that the center of these discussions shld also be in London, again with appropriate assistance from the High Commission.

How to deal with Articles 18 and 19 of the Ruhr Agreement is something of a puzzle.4 While the formal French position is that the Ruhr Agreement remains unaffected by the pool proposal, it is obvious (and the Fr have admitted privately) that IAR will be superseded by new authority. Informal discussion in London with Fr Foreign Office representative who handles IAR indicated he saw no purpose in discussing Article 19 until course of Schuman proposal discussion becomes clearer. He thought Article 18 cld be considered. If IAR eventually disappears and economic functions envisaged by Ruhr Agreement are included in new coal and steel authority, question remains as to what will happen to other parts of Ruhr Agreement such as Article 18. We believe the problem of how to prevent new excessive concentrations in Ruhr industries might be discussed in subcommittee established by Working Group. Such a discussion wld throw light on control problems involved and provide useful material in making ultimate decision as to what shld be done regarding Article 18 functions, which, of course, do not have to go to IAR. This study cld be conducted by three IAR representatives as members of subcommittee, with assistance of HICOM staffs. Study of Article 19 shld clearly be deferred.

The Study Group is also charged in Item 6 of its Terms of Reference with considering what German cooperation is required to warrant relinquishment of controls. To the extent that this cooperation can take [Page 741] the form of agreements for the settlement of problems arising out of the war and undertakings to execute measures in Germany directed to accomplishment of Allied objectives, this study can be readily undertaken by the Study Group in cooperation with the High Commission. There are, however, broader aspects of this question which cannot be considered entirely satisfactorily from the viewpoint of Germany alone. When the entire report of the Study Group is available, and when the developments of the coming months with respect to association of Germany with Western organizations are in fuller view, we will still have to consider the adequacy of all of these measures as a framework for increasing association of Germany with the nations of the West. We believe that the report of the Study Group may be able to throw light on this problem but we are not entirely certain that the problem can be dealt with as a whole by the Group.

Without committing ourselves as to periods of time or to the organization of the work suggested by the Brit (which has not seemed to take adequately into account the matter of collaboration with the High Commission), the general concept which they suggest as reported in London 3138, June 5, rptd Paris 975, Frkt 279,5 coincides with our own thinking. In other words, we think that there shld be a period of study and preliminary exploration. We think that it wld probably be useful to have an opportunity for consultation with Governments and for taking a sight of the situation as a whole, perhaps some time in August, to be followed by a period of intensive final work leading up to a report to the Ministers. Since the three Ministers will be assembled in New York for General Assembly in mid Sept general thinking in Dept is inclined to favor tripartite meeting just prior to opening of GA or approxiately Sept 11. As a practical matter we may thus be faced with situation in which report to Ministers wld be due very early in Sept. We are rather inclined to doubt, however, whether this wld allow adequate time for the completion of a full and useful report on the German problem. Having somewhat committed ourselves to produce concrete results on Germany at the next big three meetings, it wld of course be preferable from the viewpoint of the German problem alone to hold the next meeting whenever we were ready. This is a matter which will have to be considered further.

In line with the foregoing, we propose that HICOM be asked to proceed immediately with preparation of a study of the Occ Stat on a tripartite basis with a target date of August first. (We understand HICOG is already doing this unilaterally). At this stage, we believe that recommendations shld be unilaterally by HICOM elements rather than on a tripartite basis. The report wld therefore not contain recommendations but wld constitute a factual review and analysis of the [Page 742] Occ controls and problems involved in their relaxation. With this material in hand, with HICOG’s recommendations, with a report on the first phase of discussions of other items of the Agenda, and with a somewhat clearer view of other related developments such as the Schuman proposal, we would be in a position to move to the formulation of integrated positions for the later phases of the negotiation.

A report on the Occ Stat of the kind suggested, even without recommendations, will obviously go deep into the substance of the problems since any analysis will point to the possible lines of action. In addition, it will be useful to have an agreed factual basis for review of the Statute although we anticipate that disagreements may arise in HICOM as to factual position, particularly relating to description of what remains to be done in fulfilling incompleted programs. For example, US and UK consider external restitution virtually completed whereas Fr may urge that activities in this reserved field shld proceed until final peace settlement. However, it shld be possible to report factual status (with appropriate reservations where necessary) without crystallizing governmental positions to an extent that might be prejudicial to task of review of Occ Stat.

In practical terms, work wld therefore proceed as follows:

Review of the Occ Stat wld commence with a study by the High Commission on the following matters:
What action has been taken by HICOM under the various reserved powers (laws, directives, etc) and with what objectives?
What further action under the reserved powers is clearly in prospect?
Where action under reserved powers can be stated in terms of a program (reorganization of coal and steel industries, restitution, etc.), what is the present state of these programs, what remains to be accomplished, and what time period will be necessary for the accomplishment of the programs?
Intensive study shld begin as soon as possible of Items 2, 3, and 4 of the Terms of Reference to be undertaken by the Study Group in London.
A preliminary study shld be made by a subcommittee sitting in Germany of Article 18 of the Ruhr Authority Agreement.
Item 6 shld in the initial stage be subjected to only tentative exploration or shld be deferred.

Our ideas on staff and organization of work are contained in a separate telegram to London and Frankfort.6

Your earliest comments wld be helpful in permitting Dept to develop instructions prior to initiation of this work.7

[Page 743]

Sent HICOG, Frankfort as 4182, rptd AmEmbassy, London, as Tosig 4, AmEmbassy, Paris, as 2733.

  1. For documentation on the London Foreign Ministers Conference, May 11–13, see vol. iii, pp. 828 ff.
  2. The opening meeting of the ISG was subsequently delayed until July 3, at the request of the French.
  3. For documentation on the Schuman plan for pooling iron and steel production, see vol. iii, pp. 691 ff.
  4. Article 18 dealt with the transfer of powers from the Occupation Authorities to the International Authority for the Ruhr, or its successor, or to some other body created by international agreement; Article 19 dealt with powers of the Occupation Authorities over the direction and management of the Ruhr coal, coke, and steel industries. For the full text of the Agreement establishing the International Authority for the Ruhr (IAR), see Foreign Relations, 1948, vol. ii, p. 285.
  5. Not printed.
  6. Tosig 7, June 14, to London, not printed (396.1–ISG/6–1450).
  7. In telegram 5412, June 23, from Frankfort, not printed, McCloy concurred with this general approach on the tactics and organization of the ISG. (396.1–ISG/6–2350)