396.1–ISG/12–150: Telegram

The United States Delegation at the Inter governmental Study Group on Germany to the Secretary of State

top secret

Sigto 321. 1. We regret reference Tosig 2791 that Sigto 3142 was not clear as to our questions re discussion of German arms production. We will attempt in this telegram to set forth what we believe should and should not be discussed in ISG and question on which we require answers from Department.

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2. At present time, HICOM law 24 permits production of items on schedule A of that law (arms, et cetera) under license from HICOM. However, Article III of PLI agreement prohibits production of any items on schedule A of law 43 of ACA which includes roughly same items. We believe that in ISG discussions on PLI we should do two things. First, we should either revise or provide for revision of schedule A to law 24 in such a way as to eliminate military items which are obsolete, commercial items and items which do not have a significant war potential. We are telegraphing separately for clearance recommendations of expert committee we have established to review schedule A of law 24.3

3. The second thing we should do is to remove bar which PLI agreement constitutes to implementation of decisions taken by governments respecting German production for western defense. This can be done by simple change in wording of Article III to provide authorization to HICOM to license production of items listed in schedule A. This we can readily get agreed. However, it will be necessary in addition to agree that authority thus conferred upon HICOM will be exercised only in accordance with instructions given to HICOM by three governments.

4. Question with which we are confronted in ISG discussions, is whether and to what extent we should attempt now to agree in ISG upon directives to HICOM on manner in which this discretion should be exercised. USDel has proposed that HICOM be instructed to license the manufacture for export to NATO countries of certain articles other than weapons as Department instructed. British have proposed (reference Sigto 3044) a much broader directive to HICOM which raises the whole question of safeguards in connection with German military participation in western defense. We have refrained from entering into discussion on this point.

5. In our view ISG should not attempt to determine what arms Germans should or should not be allowed to produce. This question should be discussed in NATO and not in ISG. As we see process of decision making NATO will reach agreement on what Germans should not produce as part decisions German participation European defense. Three occupation powers, acting in HICOM, will define more exactly and take action to maintain these prohibitions. Production of all other types of weapons will be permitted in Germany under licensing control of HICOM. Occupation powers in HICOM will license production various weapons in given quantities. Basis on which they do this remains to be worked out between HICOM and NATO but need not involve ISG.

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6. The only aspect of German production of military equipment which we had thought might be subject for ISG discussion once US proposal paragraph 4 above had been accepted, was future structure and method of operation allied controls on production military items in Germany. We had thought this might be discussed not as part PLI discussion now but as part discussion paragraph II, directive to ISG. However this subject is already in part under discussion in NATO. In our view it can be carried through to completion in NATO so far as safeguards in form NATO or European political or institutional arrangements are concerned and dealt with so far as problem in control and administration by the occupation powers in HICOM. It is therefore our view that discussion of arms production in Germany should remain in NATO until political and policy decisions on broad problems have been made, at which point it should become problem for implementation by HICOM. Re Tosig 279, we do not anticipate NATO discussion PLI but continuing NATO discussion German production of arms. PLI, except for this question, should continue in ISG until it has been eliminated.

7. Department’s instructions required urgently both because USDel ISG must have basis for establishing limits of ISG discussion schedule A, in order to reply to British proposal Sigto 304 and because of statement by British deputy in NATO, in discussion German defense participation, that controls on German production under study by group of occupation power experts, results of which study would be required for deputies consideration of problem.

8. Re tentative US views as to weapons which might immediately after NATO agreement reached be produced in Germany (Tosig 279. November 29) USDel, ISG believes it would be mistake put forward to British and French representatives ISG, who have in our view not fully thought out this problem, tentative US position, even on a personal basis. It would be best, in our view, if US representatives NATO presented an official US view when it is available.

9. Request Department’s comments our analysis and instructions our proposals as to responsibility discussion and decision in this field.

NAT deputy concurs.

Sent Department Sigto 321, repeated info Frankfort 490, Paris 1057.

  1. Not printed: it transmitted the Department of State’s position on various items in Schedule A of Allied High Commission Law No. 24 (396.1–ISG/11–2750)
  2. Not printed; but see footnote 5, supra.
  3. Sigto 320, November 30, from London, not printed (CFM Files: Lot M-88: Box 200: ISG Cables 3rd Session 1950 volume iii).
  4. Not printed.