396.1–ISG/2–2251: Telegram
The United States Delegation at the Intergovernmental Study Group on Germany to the Secretary of State 1
Sigto 463. Comments on draft German letter on debts2 for guidance of the Allied High Commission.
(a) Introductory paragraph of German letter, see paragraph (k).
[Page 1425](b) Article 1 paragraph 2,
- (i)
- This statement does not indicate who is making it. It is suggested that it ought to be introduced by the words: “The Federal Government understands that …”. This understanding would be confirmed in the allied reply.
- (ii)
- Point of translation. Herrschaftsgewalt should be translated “jurisdiction” in the English text and by “competence” in the French text, as in the Allied draft.
(c) Article II paragraph 1.
The last sentence gives the postwar claims for economic assistance an even greater degree of priority than was provided by the original text which excluded “foreign-held claims arising out of trade subsequent to May 8, 1945, essential to the economic recovery of the FedRep.” If the priority is left unqualified in this way the settlement of every claim arising out of postwar trade might be barred until the allied governments had specifically waived their priority in regard to it and relationship with EPU might be complicated. We consider that the situation can best be met by a statement in the reply from the HICOM to the effect that the Allied Governments do not propose to exercise their priority in such a way as to hinder settlement of postwar trade claims.
(d) Article II paragraph 2.
- (i)
- We agree that settlement of postwar claims will have to be embodied in bilateral intergovernmental agreement. It is essential, however, that the Federal Government should understand that there is no intention of settling these claims on Germany except as part of an overall settlement of all types of claims on a basis agreed with them by the three powers. It is necessary that the Allied HICOM should leave Federal Government in no doubt in this respect, and we have concluded a statement to this effect in the draft reply to the Chancellor.3
- (ii)
- We do not think that arbitration would be an appropriate method of settling points which must in the nature of things be settled by negotiation but we do not want to enter into argument with Germans on this subject now. We have therefore included in our reply a form of words which leaves the position completely open.
(e) Article III should be introduced by the statement “the Federal Government understands that there is agreement between them and the Governments of USA, UK and France on the following”, which would take the place of the first three lines down to “agreed that”.
(f) Article III paragraph 2.
It appears from this text that the Federal Government is thinking of the negotiation of settlement arrangements between governments only. This is not our intention, although we agree with what we take to be the German view that the result should be embodied in one or more [Page 1426] intergovernmental agreements. It is essential that representatives of the private creditor groups and also debtors other than the Federal Government should take part in working out the over-all settlement arrangements in order that these arrangements should be acceptable to them, and so contribute to our aim of normalization. We cannot believe that the Germans wish to exclude the representatives of creditors and private debtors from negotiating settlement arrangements or that they would make difficulty about the slight amendment to this paragraph which is required. Secondly we do not wish to commit ourselves to having all interested governments including, e.g. the Iron Curtain countries, present at the negotiation of the settlement arrangements. We suggest that our aim can be achieved most easily by the deletion in the English text of the words “all” and “both”. The German text would similarly have to make clear that creditor and debtor representatives would participate.
(g) Article III paragraph 3.
- (i)
- This paragraph, read as a whole, suggests that special priority should be given to one class of creditor only. There is no question of excluding the settlement of private commercial debts, but to draw particular attention to them is bound to create a very bad impression among other creditor groups who have a right to participate in the settlement. The three governments could not subscribe to an agreement by which they singled out one group of their nationals for preferential treatment. A false impression would be particularly liable to arise since the Federal Government has deleted the reference to the fair and equitable treatment of all interested parties, which appeared in the original draft. In order to eliminate this impression, the second sentence of the paragraph should be deleted.
- (ii)
- It would be desirable if, in the first sentence of the German text “insbesondere” were substituted for “besonders”. In any case the French word should be “notamment” instead of “specialement”. In the English translation this sentence should read: “the settlement plan shall, in particular, deal with those claims the settlement of which would achieve …”. The word “best” has been deleted, because, although it appeared in the original Allied draft and in your English translation of the German text, it has been omitted from the German text itself.
(h) Article III paragraph 4.
- (i)
- We recognize that to suggest a drastic alteration of the first sentence would be to risk the reopening of the question of external assets. We cannot, however, possibly accept the implication (which would be a gift to Moscow) that the economic wealth of the FedRep has been reduced since May 8, 1945, with its suggestion that the Allied occupation has improverished the country. Therefore the words “which have occurred since May 8, 1945”, should be removed. In fact, the main reductions in wealth occurred before this, so that the deletion constitutes an improvement to the text from the German point of view.
- (ii)
- Point of translation. We should prefer that the German word “insbesondere” should be translated “notably” rather than “in particular”, [Page 1427] to indicate that the examples are examples only and not necessarily the most important considerations.
(j) [sic] Article III paragraph 6.
We cannot at present foresee exactly what character of international instrument or instruments will be required for the embodiment of the settlement arrangements when they have been agreed. The High Commission should, however, make clear to the Federal Government that it is the present intention of the three governments that German indebtedness should be dealt with in accordance with an over-all agreed plan, and that there should be separate bilateral agreements only to the extent that these prove necessary. This is covered in the draft reply.
(k) We observe that although the Chancellor was asked that German statement should include an expression of the desire of FedRep to resume payments on the German external debt, this has not been included in the present German draft. The Allied High Commission should draw the attention of the Chancellor to the omission and suggest that such a statement should be worked into the German draft perhaps in the introductory paragraph.4