249.1111–Oatis, William/12–1551: Telegram
The Secretary of State to the Embassy in Czechoslovakia 1
priority
304. Serious question arises as to Czech motives view measures Czech Gov has taken past few days. Czech auths have (1) issued orders all American banks holding Czech accounts, except Federal Reserve, transfer Czech funds to Union Bank Switz, notorious for undercover dealings; (2) requested Chase National remit immediately by cashier’s check all collections their account to Czech State Bank; (3) made efforts, in contrast previous reluctance, dispose of machinery and equipment purchased US but subject export controls (i.e. sold firm Charles A. Koons, NY, Dec 13 machinery for $184,800).
In light foregoing we are taking another look at Siroky’s willingness discuss settlement Oatis case and wonder whether his attitude in your current conversations may not be intended to beguile this gov to keep it from taking further retaliatory steps while Czech assets here liquidated rapidly and completely as possible. Oatis’ release might not then be forthcoming and Czechs would stall in [Page 1436] order obtain maximum advantage from US in short time by way transfer funds or otherwise.
In these circumstances we cld (1) take no moves against Czechs in hope current conversations with Siroky will lead speedy release Oatis or (2) block all Czech assets here. If Oatis subsequently released, funds cld be unblocked and while this would doubtless give rise to a charge of ransom for Oatis this cld reasonably be countered by making clear funds not blocked prior Oatis case and unblocking merely revision status quo ante. Or upon release Oatis it might be possible unblock all funds except portion to be held pending settlement financial claims.
Believe blocking action against Czecho wld involve fol difficulties: (1) prejudice, and possibly torpedo, current discussions on Oatis case, if FonOff on the level; (2) pose problem whether not desirable block assets all EE countries same time lest flight assets other Commie countries from US occur; (3) limit US freedom action control blocked assets Czechs as leverage or offset in efforts settle our financial claims since if we block now Czech Gov will probably insist on unblocking all its assets for freedom Oatis or hold us obligated not block their assets in future; (4) institute a far-reaching measure when Czech motives not certain, it being possible Czechs trying in midst severe dollar scarcity mobilize dollar resources Europe for purchase greatly needed raw materials and equipment outside Western export controls.
Wld appreciate urgently your estimate and views.2
- Drafted by Vedeler (EUR/EE) but not otherwise cleared.↩
- In telegram 476 from Praha, December 17, Briggs recommended that “we stall on permitting movement funds from our jurisdiction in order give ourselves time for further study”. (249.1111–Oatis, William/12–1751) In his telegram 482 from Praha, December 18, Briggs observed that there was not necessarily great significance in Czechoslovak desire to repatriate U.S. dollar holdings in view of Czechoslovak hard currency shortage, and he suggested that the Oatis negotiations were being delayed for a variety of reasons outside the Oatis case itself. (249.1111–Oatis, William/12–1851)↩