396.1–ISG/3–1851: Telegram

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

confidential

Sigto 560. In steering committee meeting March 15, 1951, UK opened discussion on post-war governmental claims. UK thought Gers wld request scaling down of total claims and raised question of interest payments, mark and foreign exchange payments and timing of settlement.

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USDel stated scaling down necessary but no decision reached re amount. In accordance NY decisions payments in foreign exchange or payments of same effect wld have to be subordinated to prewar debt settlement but US has not yet developed precise idea how these payments shld be related. Mark payments for governmental needs, not resulting in burden on exchange position, wld have to be related to agreed governmental programs; purposes as well as safeguards to protect exchange position must be spelled out.

UK agreed some scaling down necessary but Brit position not yet decided. UK favors mark payments for interim period, with some flexibility and with scale related to governmental requirements of govts. After satisfactory solution of questions relating to occupation, defense and general econ situation, Gers shld pay in foreign currency. UK further stressed urgency of laying down in advance tripartite position on postwar claims in view expected inquiries from creditors and Gers, referring to existing priority of post-war claims over prewar debts. He considered necessary that position be communicated to creditors and Gers before stage 2, or at latest during stage 2.

US stressed need assure flexibility in view prospective changes governmental requirements and relations with Gers. Also pointed out flexibility re settlement governmental claims cld be assured easier than re private claims. Same considerations apply to problem of mark payments, which can be controlled more effectively in case governmental claims.

Fr referred to possibility debt payments might be related to occupation costs, in view Ger unwillingness to pay latter. Since Fr have no substantial post-war claims, settlement might increase their burden connected with occupation costs. US–UK pointed out NY decisions, which related debt settlement to burden occupying powers, refer also to post-war debts.

UK suggested negots with Gers shld not be initiated in Ger but rather Ger shld come to London or other place. US pointed out talks will necessarily be very complex, since Gers will bring up numerous objections against size of allied claim especially in connection with JEIA operations, pricing of export goods, timber exports from Fr zone, etc.

Question of post-war claims will be discussed after recess in steering committee, substantive questions will have to be deferred until claims committee reconvenes, but procedural questions might be taken up earlier.

  1. Repeated to Frankfurt.