Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 2

390–ISG/3–351: Telegram

The United States Delegation at the Intergovernmental Study Group on Germany to the Secretary of State ¹

secret   priority

London, March 3, 1951—4 p. m.

Sigto 489. At str committee meeting March 2, French stated that could agree to send agreement on PLI to HICOM to decide timing, i.e., they agree that whatever agreement is worked out now can be turned over to HICOM which will decide effective date in light of tactical considerations and without interference in, or objection by governments to decision. This represents major change from previous French position re timing which is that agreement should be given to HICOM for use as bargaining counter with Germans in connection with defense discussions and presumably not made effective until agreement reached with Germans on participation in defense.

French state two qualifications to their new position on timing:

(a) They are not willing make any change now in steel production limitation or steel capacity limitation generally, but they are prepared to enter into agreement on conditions under which these limitations may be abolished. These conditions not yet precisely stated, but would relate to satisfactory agreement on coke allocation or to some stage of implementation of Schuman Plan treaty, whichever earlier, in case of production limit, and to effective date of Schuman Plan treaty in case of capacity.

(b) They cannot make any agreement now on further relaxations in stage two, i.e., when agreement reached on German participation in defense.

In view of this change of French position re timing, we believe we are in position to conclude quickly interim agreement which could be made effective in very near future. Such agreement would definitely include (1) complete elimination of limitations re aluminum, ammonia, chlorine, styrene, and on size, speed, number and aggregate tonnage of merchant ships constructed in or acquired in Germany except passenger ships, (2) elimination of licensing requirement for list B machine tools, but requirement of reporting of production and stocks for reduced list of tools (3) revised control of electronic tube production under draft agreement of December with additional prohibitions (Tosig 455 March 2²) and provision for review within four months and (4) instruction to HICOM on schedule A items which may be produced immediately for NATO countries. (5) Less restrictive implementation of remaining capacity limits along lines of proposal IGG/P (51) 20 (Sigto 482 March 1).³ Would probably include some (we would hope all) following which are still under consideration:

(1) Some modification of present restrictions on synthetic oil and rubber production and on rehabilitation and use of plants.

(2) Elimination of cranes, derricks and other lifting appliances and possibly key machine tools from list of controlled items shipbuilding capacity.

(3) Explicit permission for A. G. Weser Deschimag Yard to construct as well as impair ships.

(4) Specific authorization for return of Kugelfischer bearing manufacturer equipment allocated to Czechs and now held US Zone to German economy.

(5) Provision to permit review of agreement as soon as desirable in light of changing circumstances (further telegram this subject follows⁴). Prohibition magnesium production and capacity and limitation bearing capacity, except Kugelfischer equipment reference above, would remain in effect.

There would be no definite agreement re stage two, i.e., when Agreement reached on German participation, the US and British probably would record views on this.

Agreement probably would not change present steel production limit as modified by September decision Foreign Ministers or steel capacity limit generally, though it would (a) eliminate centrifugal casting equipment from list of controlled items (b) eliminate special restriction applying to “Petersberg Protocol plants”⁵ and (c) provide for less restrictive application capacity controls (see above). French have indicated willingness to enter into agreement on conditions under which steel production and capacity limits may be abolished, as indicated above. British have indicated they probably will agree to elimination steel capacity limit when agreement reached on German participation in defense though they have not yet secured clearance of this position within British Government. In presenting this problem within British Government they have addressed question of what happens when agreement reached on German participation in defense, but have not addressed problem of what happens when Schuman Plan made effective. British are reluctant to address this problem now, though they recognize possibility that Germans may ask French to secure agreement of all three occupation powers that steel controls will come off when plan made effective before they ratify treaty, and they are prepared to make provision to address problem when this question arises in any definite form or when treaty made effective. US position is that production limit should be eliminated not later than ratification Schuman Plan treaty by Germany and capacity limit should be eliminated when treaty ratified, but in both cases not later than agreement reached on German participation in defense.

In view of divergences these positions, especially of British from US and French, and uncertainty of future developments, we believe best we can do on steel limitations generally in any agreement reached now is to leave present situation intact (except for minor revisions capacity control indicated above), record positions of three governments and provide greatest possible flexibility in review provision of agreement. British position on steel particularly points up necessity of flexible review provision.

Gillet has returned Paris to consult French officials. We have asked him to get precise statement re French position on elimination steel controls and to seek authority for further relaxation French position, particularly re synthetics, details of shipbuilding capacity control and passenger ships.⁶

1. Repeated to Frankfurt and Paris.
2. Not printed.
3. Not printed; regarding IGG/P (51) 20, see footnote a, p. 1364.
4. Sigto 490, not printed (396.1–1 SG/3–351).
5. For the text of the Petersberg Protocol of November 22, 1949, see Foreign Relations, 1949, vol. iii, p. 343.
6. On March 5 HICOG indicated that it was “reluctantly willing accept interim agreement in face obvious impossibility reaching more satisfactory solution this time. …” On the following day the Department of State also approved the proposal for an interim PLI agreement. (Telegrams 7146 from Frankfurt, March 5, and Tosig 466 to London, March 6, neither printed, 396.1–ISG 3–551)