394.31/7–2551: Telegram

The Ambassador in Czechoslovakia (Briggs) to the Secretary of State


68. (Section one of two)

I. Believe case against Czecho under sec 5 trade agreements extension act 1951 must rest on fact that since Feb ’48 Czecho has followed autarchic trading policy imposed upon Peoples Democracies and that apparent deviations explained by fact that Sov orbit countries continue dependent upon non-orbit countries for some commodities. (Deptel 21, July 10)1

II. Emb will cite below public statements and specific directives which reveal Czech fon trade policy. To appreciate significance material quoted it is necessary understand real meaning of terminology used and fact that Czech public statements on fon trade are deliberately guarded to deny GATT members basis for abrogating trade concessions. Ref to “cooperation with Sov Union in constructing socialism and Socialistic economy” means strict compliance with edicts of Cominform Council for Mutual Econ Assistance, with Sov master plan for development of economies of Peoples Democracies and with limitations stemming from Czech-Sov trade agreements. Term “capitalist country” means any country outside Sov orbit. “Strengthening of Czech independence” means reducing trade with non-orbit countries to absolute minimum. “Protection from economic crisis in capitalist market” means eliminating all imports except those which cannot be obtained within Sov orbit and production or export to Sov orbit only. Secret directive outlined in numbered para IV below and the trading experiences of non-orbit countries with Czecho since 1949 show true meaning of vague terms usually used in official references to fon trade policy.

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III. Basic fon trade policy outlined by Pres Gottwald before Central Comite Czecho CP Feb 24, 1950 (page 17 first para enclosure 1 Embdes 266 Mar 18, 1950).1 This policy foreshadowed by speech Gregor Min Fon Trade Apr 21, 1949 and put in focus by statement Mia Ind Kliment Mar 10, 1950 (DEE divisional report EE-92 Sept 11, 1950).2 In article Prace Dec 28, 1950 Gregor again referred to need to “further strengthen independence of economy from imports from capitalist countries”. Dolansky press State Planning Office in speech before Central Comite Feb 22, 1951 referred to econ agreement among Peoples Democracies stating these agreements “protect them from the influence of uncertain development in capitalistic markets, paralyze the effects of discrimination and strengthen the econ independence of our country on capitalist countries”. Commenting on Czech-Chinese trade agreement June 23, 1951 Gregor said that it meant “a further strengthening of the independence of our industry from the imports from capitalist countries”. (Ceteka bulletin 1/356 June 25)2 Report of Czech Cabinet on 1951 fon trade plan states it “will assist in strengthening independence of the republics and in increasing share of USSR and Peoples Democracies in imports from 55 to 61 percent and in exports from 54 to 59 percent”. Official figs for first quarter 1951 reveal share of Sov orbit in Czech fon trade rose to 56.5 percent compared with 48.2 percent for first quarter, 1950.

(Section two of two)

IV. In April or May 1950 a secret directive was issued to vice ministers and section and department chiefs in Fon Trade Min implementing the policy laid down by Pres Gottwald (III above). The directive provided that beginning Jan 1, 1951 Czech Govt would successively implement a policy designed achieve independence from trade with capitalist world. With respect imports this directive provided: (1) only absolute essentials to be imported from capitalist countries and these only when adequate substitutes could not be found, within Sov orbit; (2) insofar as possible payments to be made through export non-essential goods; (3) to extent shipping available all imports to be channeled through ports of Stettin Gdynia and to be carried on Sov orbit ships. Re exports: (1) nothing to be delivered to capitalist countries which is required in Sov Union or Peoples Democracies; (2) no exports which can be used for defense permitted to capitalist countries; (3) Peoples Democracies granted priority in delivery goods required for rebuilding their economy; (4) exports to capitalist countries to be limited to non-essential goods insofar as-possible; (5) deliveries of iron and steel products to capitalist countries to be reduced to minimum (following Czech-Sov five year trade agreement concluded Nov 3, 1950 delivery cast iron products to non [Page 1385] orbit countries reduced by 80 percent); (6) shipping across West Germany and from Western European ports to be reduced to minimum and whenever possible, Polish vessels to be employed for overseas trade.

This directive was issued jointly by the Cabinet of Min Fon Trade and by econ committee of central secretariat Czech CP.

Emb does not have copy of directive referred above but info considered reliable.

V. a. Visas: Officials in fon trade office instructed not to recommend granting visas to citizens of non-orbit countries unless their visits to Czecho contribute significantly to Czech economic interests. In contrast this restrictive policy governing US and other Western businessmen, visas never refused for commercial missions from orbit countries.

b. Efforts Emb officials discuss general economic problems with Czech authorities not only rebuffed but in one instance resulted in public statement by Czech official urging vigilance against “seemingly innocent inquiries by Western diplomats who conduct espionage activity in Czecho”.

c. Oatis trial (July 1951) and Louwtms [Louwers?] (Dutch businessman) trial (Mar 1950) demonstrated that any American official or private businessman inquiring into commercial or economic activity in Czecho vulnerable to accusation of espionage.

d. US or other Western official exhibitors who might participate Prague trade fair or Karlovy vary film festival required tailor exhibits fit political criteria established by Czech Govt.

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