Foreign Relations of the United States, 1951, Europe: Political and Economic Developments, Volume IV, Part 2

No. 767

611.61/1–1651

Draft Department of State Policy Statement¹

secret

Washington, undated.

Policy Statement—USSR

a. objectives

The Soviet Government is officially committed to a policy of world domination in the name of Communist ideology. Its leaders have succeeded in cloaking the national ambitions of the Soviet state in terms of Marxism-Leninism—linking international Communism with Russian imperialism—and so can utilize the resources of both to achieve their aims. Thus, in the name of a philosophy of dynamic social change, the Soviet state strives to bring about the destruction of all other types of society and to replace them with Communist social organizations which in reality become Soviet-controlled dictatorships. The United States, as the strongest, militarily and economically, of the states whose independent existence and way of life constitute, by their very nature, impediments to the attainment of Soviet ambitions, has become the principal target for Soviet propaganda and the primary obstacle on the path to Soviet world domination.

The basic objective of U.S. policy must be to assure the security of the U.S. against its only effective enemy, the USSR.

To meet the USSR’s challenge, the U.S. must also acknowledge that the dynamic forces of Communism, implemented by Soviet might, can be effectively offset only by an equally dynamic counteroffensive, on a world scale, by the forces of democracy. If such a counter-offensive is to be undertaken successfully, the U.S. must be its prime mover and must provide much of the material backing. The measure of success in this undertaking will be determined by the degree to which the U.S. can win the active support of those people not under Soviet control.

To accomplish this objective the U.S. (1) must bolster the military and economic security of the areas threatened by the Soviet Union and by Communism, and must engage in a sytematic campaign to weaken the Soviet camp economically, morally and politically, and, (2) taking measures to ensure a dominant popular sentiment in such areas for democracy and against Communism through demonstration in concrete terms of the inherent and increasing advantages of the democratic way of life, develop the people’s self-confidence and will to resist Soviet Communism.

Each of these objectives is of equal importance; failure in any one could in the long run mean failure to meet the Soviet challenge successfully.

b. policies and policy evaluation

1—To strengthen the United States internally:

Effective United States leadership of the non-Communist world requires that the United States be capable of taking and sustaining effective action to achieve its objectives. Military preparedness, economic progress and national unity are, of course, basic elements in any attempt to demonstrate the soundness of our system.

(a) U.S. military strength must necessarily be the bulwark behind all free nations opposing Soviet expansion by armed force.

(b) U.S. economic stability must be sustained, on the one hand to give the lie to the Marxist theories of the weakness of capitalist economy and its inevitable collapse, and, on the other hand, to provide support for the development of the economies of other free nations and of those backward areas which are now a special target of Soviet Communist policies and propaganda.

(c) Together with these factors affecting the material strength of the U.S. must also be considered U.S. unity in handling the solution domestically of the problems that must be solved elsewhere. Concrete American successes in meeting social problems and in advancing dependent areas under U.S. control constitute convincing evidence of the vigor and reliability of the U.S. in the struggle with the USSR.

2—To aid the non-Communist world to withstand Soviet aggression and to solidify adherence to the principles of freedom and democracy:

It is essential that the U.S. and other free nations opposing Soviet objectives maintain their combined military strength at a level sufficient to deter the Soviet Government from the use of armed force. This policy is being implemented through the North Atlantic Pact, the Military Assistance Program, the Inter-American Defense Pact and other continuing and special military cooperation projects.

At the same time, the U.S. must strive to strengthen and maintain the economies of free nations, both as a contribution to their military potential and a measure of alleviating the economic conditions which furnish breeding grounds for Communism. Confidence must be established in the ability of a free economic system to surpass the alleged potential capabilities of Communism. This policy is being implemented by the Economic Cooperation Act, the Greek-Turkish Aid Program, the Point IV Program, Export-Import Bank and the International Bank loans, International Monetary Fund advances, United Nations programs and other continuing and special economic programs.

U.S. economic assistance to other nations, however, is not limitless either in extent or duration. It must be concentrated in those areas where need is greatest and where adequate probabilities for success exist. It should serve as an aid to self-help in the countries concerned and as an incentive to the participation of private capital, particularly in the development of backward areas.

All the above steps must be supplemented by measures to create and strengthen lasting ideological and cultural ties with the free nations. This policy is being implemented through the UN, the U.S. information and educational services and programs, and through American private and public contacts abroad. Particularly emphasis must be placed on those areas which are special targets for Communist propaganda and Soviet pressure. Southeast Asia is today a point of vital concentration for U.S. cultural and social activities, as are those areas in the Near and Middle East contiguous to the USSR. At any given time the areas of emphasis must be determined in accordance with the degree of gravity of the Soviet threat, the strategic importance of the area to U.S. interests, and the likelihood of effective response to U.S. assistance. Policies and programs for all areas must be sufficiently flexible to meet the continual changes in the international situation, and must be formulated in keeping with overall objectives.

3—To meet the Soviet challenge directly, to block the USSR in the achievement of its objectives and to weaken the Soviet dictatorship:

Political:

The U.S. must apply its policies toward the Soviet Union in a manner designed to seize political initiative from the USSR and maintain it. The extent of American success in keeping Soviet leaders on the defensive is a positive gauge of American success in meeting the Soviet challenge. Containment of Soviet imperialism within its present borders fulfills an essential role in United States policy toward the USSR as long as it remains active containment, forcefully countering Soviet pressure for expansion. The United States must avoid allowing containment to degenerate into static defensism. Only by a consistently active containment policy in relation to the USSR can the United States justify its position of leadership in the non-Communist world.

Economic:

The denial or restriction of material and technological assistance to areas under Soviet control is being effected at present to the greatest extent practicable by the United States export control system, the application of similar controls by other non-Soviet countries in collaboration with the U.S., and by persuasion against the export of strategic technology to Soviet-controlled areas. (The problems of export controls and East-West trade have been considered separately as one of the major policy issues.)

Informational and Cultural:

The USSR is vigorously opposing, by jamming of VOA² and by administrative throttling of Amerika magazine,³ the work of the only two USIE media now effective in the USSR. VOA’s operation is being strengthened; Amerika will be maintained as long as possible.

Foremost objectives of USIE should be (1) to reduce the Soviet Government’s ability to utilize the Soviet population in activities detrimental to the security of the US and the countries of the free world, and (2) to create popular attitudes in the USSR contributory to future mutually beneficial relations between our two nations.

USIE’s message to the Soviet population should speak for and strengthen the determination of elements maintaining silent opposition to the Kremlin. USIE should, by making clear the true significance of the Kremlin’s activities, encourage the growth of opposition opinion. In these efforts to aggravate the potentially severe stresses in the Soviet national structure, held together primarily by force, fear and deception, USIE should capitalize upon every vulnerability of the artificial Soviet thought control system.

Essential components in this work should be the conveying (1) of confidence in the benevolence of the US and of the free world, (2) the concept, however vague, of a desirable alternative to the Soviet system, and (3) accurate knowledge of the US, its internal unity, its allies, the UN, and important trends and events.

I Major Policy Issues and Problems

1. Political

In the Soviet view, armed conflict is the inevitable climax of the struggle between the capitalist states and communism, i.e., the USSR. Soviet policy is therefore devoted to improving the terms on which it will enter that climactic armed struggle. By combining military pressure from without and Communist pressure from within under conditions of formal peace the Soviet Government aims to pick off its victims one by one with minimum risk of general war and maximum assurances of final victory.

The United States Government does not consider it justifiable to conclude that the Soviet assumption of inevitable war, or Soviet objectives and policies, by themselves, make armed struggle inevitable. The measures taken for the assurance of economic well-being and consolidation of resistance in Western Europe are in themselves removing one of the basic conditions required by Soviet doctrine for initiation of the armed struggle, i.e., the existence of a “revolutionary situation.”

A firm, active policy demonstrating the unity and strength of the U.S. and the other peace-loving nations of the world will tend to eliminate the immediate possibility of armed conflict. There is, however, an element of calculated risk in this position. The possibility will continue to exist that the Soviet leadership will elect to strike before its relative position is further weakened. Although such an eventuality is considered unlikely at present, it must nonetheless be acknowledged.

A principal task facing the U.S. is to execute our basic policies in the manner best calculated to minimize the chances of resort to war. This requires that the growth of the relative power of the western world must be accomplished with an absence of provocation, and with a steady sureness that will minimize the likelihood of violent efforts to restore the balance.

2. Economic

Under existing conditions, U.S. economic policy toward the USSR, as well as toward other countries under Soviet control, is formulated in consideration of the political and military aspects of our basic objectives. U.S. general commercial policies prevail only in so far as they are compatible with the attainment of these objectives. Our economic policies are designed to strengthen the economic-military potential in non-Soviet areas and, if possible, to retard the growth of the Soviet military potential.

The Soviet Union has rejected the long-run programs of the United States for improvement of trade and other economic relations among the peaceful nations of the world, preferring to seek its own economic ends through unilateral action and economic aggression at the expense of weaker states. A major shift in Soviet policy would be necessary for genuine Soviet participation in the world economic programs sponsored by the U.S.

Trade Relations

Security Export Controls

Under March 1948 regulations, exports to European countries are subject to license controls: 1) to insure optimum utilization of short-supply products to strengthen the economies of non-Soviet states, and 2) to restrict exports to the Soviet Union and to countries under its control of goods which would contribute directly or indirectly to the military potential of the Soviet bloc. Exports to Finland and Yugoslavia receive more lenient treatment as a means of furthering our political objectives in these areas. The present control of China by the Communists necessitates the extension of similar export controls to shipments destined for China. The U.S. is seeking to obtain the agreement of other nations similarly to restrict strategic exports to the Soviet sphere, particularly from the main alternative sources of supply in Western Europe.

In strengthening the economies of countries opposed to Soviet expansion, particularly the countries of Western Europe, the need for increased trade with the Soviet bloc has been recognized. Since Soviet commodity requirements from Western Europe are concentrated in industrial items, a large portion of which would contribute to the Soviet war potential and are thus subject to export controls, a conflict in policies has existed for some time. However, efforts are being made to increase the volume of trade with the Soviet bloc in items not directly contributing to the Soviet military potential, while restrictions are being continued on the prohibited list.

United States Imports from the Soviet Sphere

In recent months there has been increasing domestic pressure for the imposition of import controls or even an outright embargo against U.S. imports from the USSR and the satellite countries. While such pressure has originated in large part with the domestic producers adversely affected by such imports, many of the protests have been motivated by concern as to whether the policy of permitting imports from the Soviet bloc countries is consistent with our policy of active containment of the Soviet Union at the present stage of the cold war. Since the paramount consideration in our trade relations with the Soviet bloc is the national interest of the United States, rather than the interests of specific industries which might be affected by such imports, we must take into account the fact that the U.S. is still receiving strategic imports of manganese from the USSR, which are still considered important at the present time in terms of our stockpiling program. We must also beware of the danger that any concessions to high tariff interests on imports from Soviet bloc countries might provide an opening wedge for concerted pressure against imports from Marshall Plan countries. Nonetheless, the importance of depriving the Soviet bloc countries of dollars earned through U.S. imports must be borne in mind and our future policy on imports from the USSR and its satellites is being given careful consideration with a view to possible import controls or other legislation at the next session of Congress.

c. relations with other states

The Soviet Union is guided in its conduct of relations with foreign states by its basic concept that the world is divided into two irreconcilably hostile camps: (1) the Soviet-led socialist camp which, according to Soviet doctrine, is historically predestined to grow in size and strength; and (2) the American-led capitalist camp which is historically doomed to weaken and ultimately to collapse. Soviet theory further postulates that since capitalism will not depart from the world scene of its own accord, an inevitable collision will take place between these camps.

In carrying out its foreign policy on this basis, the Soviet Union has necessarily developed a varying set of relations with three main areas of the world: (1) the countries associated with the Western states, often referred to as the Western bloc; (2) the countries of the Soviet bloc; (3) the countries of the semi-colonial and former colonial areas, particularly in the Middle and Far East, which the Kremlin currently seeks to embrace within its power system. Other regions, such as Latin America and Africa, do not constitute areas of primary interest to Soviet policy objectives at present, except in that the countries therein provide a fertile field for fomenting internal strife and discontent in order to thwart Western influence and policies.

The USSR’s relations with countries considered in the Western bloc have deteriorated consistently since 1945, reaching their lowest point in 1950. Soviet relations have deteriorated particularly with the United States and the United Kingdom as the two leading states of the western group. Apart from its continuing efforts to gain political power in the states of the Western bloc through the agency of national Communist parties, the Soviet Union’s central purpose in its current relations with these states is to prevent their effective military and political unification in defense against Soviet imperialism and to retard the economic progress which would enable them to better withstand the Communist threat. To achieve these goals, the Soviet-directed Cominform has concentrated much of its energy in efforts to sabotage the European Recovery Program and the Mutual Defense Assistance Program, and one of the aims of the peace proposals of the Communist World Peace Congress has been directed toward inhibiting Western defense planning under the North Atlantic Treaty.

Meanwhile the countries of the Soviet bloc have been increasingly subordinated to Soviet dictates and have become complete satellites, a process considerably hastened by Tito’s defection. Of the orbit states of Eastern Europe, only Finland has retained any degree of political independence. Current Soviet relations with these states may be said to consist primarily of efforts to improve economic relationships along lines best calculated to strengthen the Soviet Union as a national power, increase the military capabilities of the satellite states, and bind them more closely to the USSR.

The third area, that of the semi-colonial and former colonial areas, currently presents international Communism with its most fertile field for expansion, and Soviet foreign policy in 1950 has been particularly active in advancing toward that end. In accordance with traditional Soviet practice, the Kremlin has conducted toward the states of this area a dual policy, both aspects of which are directed toward the promotion of Soviet influence. On the one hand, it has made official efforts to improve diplomatic relations with the established regimes in these states. On the other hand, it has given unofficial support to attempts on an unprecedented scale to undermine and overthrow the established governments of the same states through guerrilla warfare and subversive tactics by local Communist groups and through the establishment and diplomatic recognition of rival regimes. Thus while Moscow in recent months has courted favor with India, established diplomatic relations with Indonesia, finally implemented a 1948 agreement to exchange missions with Burma, and drawn closer to Iran with the signature of a trade agreement, it has at the same time backed Communist-led insurgent groups throughout Asia and has even extended diplomatic recognition to one such group, Ho Chi Minh’s regime in Vietnam. Moreover, through the agency of the WFTU Peiping Conference (November–December 1949) it has instructed Asian Communists that “armed struggle” should be their primary tactic.

Special places in Soviet foreign policy are occupied by Yugoslavia and China, the former because its defection represents potentially the gravest threat to the Soviet power system should its example be followed successfully by other nationalist-minded Communist governments, and the latter because Mao Tse-Tung’s regime bears the closest similarity to the Tito government of any of the Communist states and its loss to the Soviet bloc would be by far the most damaging to Moscow’s interests. Although Moscow’s efforts to subvert Tito—by political pressure, economic warfare, and encouragement of internal revolt—have failed thus far, these efforts are being continued. Their result to date has been principally to drive Yugoslavia progressively closer to the Western states in matters of foreign policy.

In the case of Communist China, Soviet actions appear to be based on a policy of gaining maximum political and economic advantages from the new state, at the same time avoiding at all costs the spread of Titoism to China. An important Soviet tactic in binding China to the USSR has been to incite China against the West at every opportunity, hoping thereby to instill thoroughly in the minds of the Chinese leaders the concept that they need to rely upon the USSR in a joint struggle against their “common enemy” of Western capitalism. Thus far the USSR seems to have been entirely successful in achieving the goals of its China policy. In February 1950, Moscow signed agreements with China which linked the two states in a 30-year military alliance, affirmed Soviet concessions with respect to the Changchun Railway, Port Arthur, and Dairen although providing for the eventual relinquishment of these concessions and gave China a 5-year credit of 300 million dollars. Moreover, whether as a result of pressure from Moscow or as a result of its own nationalistic drive to eliminate Western influence from Asia and assert Chinese power in its stead, the actions of Communist China in the international field have consistently been in line with Moscow’s drive against the West, culminating in its intervention in the Korean War. Whether the Chinese intervention in Korea contains the seeds of conflict between Moscow’s and Peiping’s interests, especially in Manchuria and Korea, remains to be seen.

I. The USSR and the United Nations

The United Nations plays an important role in the implementation of two major policies of the United States towards the Soviet Union as set forth herein—in aiding the non-Communist world to withstand Soviet aggression and in blocking the USSR in the achievement of its objectives.

As the Secretary has stated, “The major problems which press upon us cannot be solved by national action alone but require common action in the light of the common public interest.” While there are a number of international organizations where common action is possible on a regional basis, only in the United Nations do we have a forum which includes the representatives of practically all states in the world. Where action to aid the non-Communist world or to meet the Soviet challenge should be on a universal basis, the United Nations is the most appropriate forum for such action. For example, the General Assembly resolution of December 1, 1949 on the Essentials of Peace⁴ supported by fifty-three of fifty-nine United Nations members was an effective answer to the Soviet propaganda campaign which sought to brand the United States and the Western democracies as warmongers.

Soviet participation in the United Nations and its subsidiary agencies is of immediate advantage to the United States in the following respects:

1. The presence of the Soviet Union in the United Nations vividly emphasizes to the leaders of all member states the vicious ideology and tactics of Soviet leadership and thus strengthens the unity of the free world in opposition to the Soviet Union.

2. As long as the Soviet Union continues to participate in the United Nations, we have a readily available forum for securing a measure of agreement with them in the event of some change in the Soviet leaders’ interpretation of their basic ideology or in Soviet tactics so as to permit the establishment of a mutually satisfactory modus vivendi.

On the other hand, the Soviet presence in UN organs invariably results in partial or total obstruction of the work and prevents the organs from taking the most expeditious and effective action. The Security Council record in the Korean situation up to August 1 is an example of what can be accomplished in the UN without Soviet obstruction.

Threats of temporary or permanent withdrawal of the Soviet Union from the United Nations should not be permitted to coerce the United States into the acceptance of policies or courses of action not in harmony with its basic objectives.

The United States regards the Soviet action of walking out of the Security Council on January 10, 1950⁵ as such an unwarranted attempt at coercion.

In the Security Council, where the Soviet Union is in a position to veto any substantive proposals with which it does not concur, the United States has sought through Charter interpretation and through agreement among the permanent members of the Council to limit somewhat the scope of the veto, especially with respect to admission of new members to the United Nations and the pacific settlement of disputes and situations endangering the maintenance of international peace. The United States has at the same time supported the practice of consultation among the five permanent members of the Security Council before important decisions of the Security Council are to be made. Where differences have existed, the United States has sought without modifying its basic objectives to secure as great a measure of agreement as possible, but in the absence of any agreement has not hesitated to support proposals which the Soviet Union opposed and vetoed. Furthermore, the United States has on a number of occasions taken matters to the General Assembly when the Security Council has been frustrated by the Soviet veto. In this way the UN has been able to function reasonably effectively despite the Soviet veto.

With respect to other organs of the United Nations where the Soviet Union is unable to block majority decisions, the United States in general seeks to take positions consistent with its basic policy objectives which will have the widest possible support in the international community. While the United States does not wish to take positions in these organs which are especially provocative to the Soviet Union, nevertheless the United States will not avoid its responsibilities of advocating constructive measures in these organs merely because of Soviet opposition.

The Soviet Union is presently participating in only two specialized agencies, the Universal Postal Union and the International Telecommunication Union. The Soviet Union recently withdrew from the World Health Organization and is encouraging its satellites to withdraw from the specialized agencies. (The Soviet Union has ratified a convention setting up a World Meteorological Organization, which has, however, not received the required number of ratifications to take effect.)

d. supplementary problems

I. Political

American officials in the USSR, as in the satellite countries, work under repressive conditions in complete contradiction to traditional diplomatic usage. Their movements are highly restricted; normal contact with the Soviet people has been virtually eliminated through the operation of the State Secret Decree of 1947 and other laws and restrictive measures; local employees of the Embassy are subject to control and intimidation by Soviet authorities; strict limitations are placed on the amount of goods which can be imported by the Embassy and its staff on a duty-free basis; Embassy staff members are even prevented from securing Soviet drivers’ licenses to operate their cars.⁶

Since a policy of applying to Soviet and satellite representatives in the United States travel restrictions on a reciprocal basis is under active consideration, this problem is touched on in greater detail below. In addition, another problem requiring more detailed treatment is the question of the Soviet obligation under the Roosevelt-Litvinov Agreement of 1933⁷ to permit an American clergyman to administer to the religious needs of Americans in the USSR.

1. Travel Restrictions. The travel restrictions announced by the Soviet Government in 1941 and restated on September 30, 1948 are still in effect. These regulations restrict travel by all members of the staffs of the diplomatic missions at Moscow within the Russian, Ukrainian, Byelorussian, and Georgian Union Republics and prohibit all travel in the other twelve Union Republics. Travel by automobile from Moscow is confined to only ten roads leading to points varying from 10 to 50 kilometers from the city. If a trip outside of the city is planned, advance notification must be given to the Soviet Government. Trips beyond 50 kilometers from the city may be made only by public transportation after the necessary tickets are obtained from the appropriate government agencies. The latter, of course, is equivalent to advance governmental approval of the proposed travel.

The question of imposing on Soviet officials in the United States similar restrictions on the basis of a policy of reciprocity has been carefully considered by an interdepartmental committee and an agreed action has been recommended for approval and implementation when the Departments of State and Defense deem it advisable.

For the most part, each time that someone makes a trip outside of Moscow he is openly followed. And, although it is not a common practice, Embassy personnel are sometimes followed in the Moscow area.

2. American Clergyman in the USSR. The Roosevelt-Litvinov Agreement of 1933 provided that religious groups or congregations composed of American nationals in the USSR would have the right to have their spiritual needs ministered to by ecclesiastical functionaries who are nationals of the USA and that such functionaries would be protected from all disability or persecution and would not be denied entry into the Soviet Union because of their ecclesiastical status. In January 1950 the Reverend John O. A. Brassard finally received a Soviet entry visa after waiting for approximately ten months. Since his arrival in Moscow in the early part of 1950, in spite of repeated representations by the Embassy including a visit by Ambassador Kirk to Acting Foreign Minister Gromyko on September 15, 1950, Father Brassard has not received authorization to use the facilities of the Church of St. Louis, which had formerly been the church used by his predecessors.⁸ In Ambassador Kirk’s conversation with Mr. Gromyko, the latter made it clear that the Soviet Government would not “intervene” to permit Father Brassard to use the Church of St. Louis. It is clear from this conversation and from the previous representations made to the Ministry of Foreign Affairs that the Soviet authorities have adopted the attitude that an American clergyman in the USSR is a chaplain of the Embassy and that the Embassy will be responsible for providing facilities to enable him to conduct religious services. This position of the Soviet Government has been protested and rejected by the Embassy.

II. Economic

(A) Commercial Policy and Trade

1. Conflict of U.S. Trade Controls with Treaty Commitments. Under the 1937 Commercial Agreement between the USSR and the United States,⁹ the USSR received most-favored-nation treatment with regard to exports from and imports to the United States, while in return, the USSR agreed to increase substantially its purchases in the United States. Under existing conditions, i.e., U.S. export controls directed at the Soviet sphere, the agreement is of no benefit to the U.S. and has been used by the USSR for propaganda purposes by charging violation by application of discriminatory export controls. Similar charges are to be expected should the U.S. adopt controls over imports from the Soviet sphere. The agreement contains no escape clause providing a basis for countering these charges. It is contemplated, therefore, that the agreement will be denounced by the United States at the first favorable opportunity under the provision in the agreement providing for termination by either government upon six months’ notice.¹⁰

2. Tariff Concessions. The United States does not have a general trade agreement with the USSR and negotiation of such an agreement is unlikely in the foreseeable future. Under the most-favored-nation treatment provision of the 1937 Commercial Agreement, however, and under the Trade Agreements Act of 1934 the USSR benefits from concessions to other countries on furs and the strategic commodity manganese. Chrome ore, another strategic commodity, is on the free list. The luxury items crab meat, peppermint oil, and caviar probably are the principal Soviet exports to the United States on which tariffs have not been reduced. In order to deny these benefits to the USSR, it would be necessary to terminate the Commercial Agreement of 1937 and for the President to proclaim the USSR ineligible for M.F.N. benefits under the Trade Agreements Act.

3. Strategic Imports. Manganese and chrome ores are strategic commodities included in the U.S. Government stockpiling program. In December 1948, the principal United States importers of Soviet manganese and chrome ores were given to understand that shipments of these commodities to the United States in 1949 would consist only of amounts required to fulfill commitments outstanding for 1948. Actual shipments in 1949 amounted to 73,000 tons as compared to 385,000 in 1948. The United States has ignored the implied possibility of bargaining export licenses for manganese, and instead has concentrated its efforts on developing other sources of supply. Despite continuing small shipments from the USSR the United States is pursuing a policy of developing other known sources, so that this Soviet economic lever may be dissipated and dependable sources of manganese and chrome will be available in an emergency.

4. Soviet Trade Practice in U.S. Trade between the United States and the USSR is conducted to a large extent through Amtorg, a New York state corporation wholly owned by the Soviet Government, recently forced to register with the Department of Justice under the Foreign Agents Registration Act. To a lesser extent trade is carried on directly with Soviet Government agencies. In view of the comparable nature of the U.S. and Soviet economies and the resultant small volume of trade between the two countries the disadvantages accruing to U.S. private enterprise in dealing with the Soviet trade monopoly do not present a major problem. U.S. free enterprise, however, is at a disadvantage in bargaining with the USSR to obtain such strategic commodities as manganese and chrome.

5. Export of Technology. United States policy on the export of unclassified technology by private firms, as in the case of export of goods of strategic significance, in general is based upon the security considerations underlying our policy with respect to trade with the Soviet bloc. Control of the export of technology, however, is much more difficult to implement in view of its widespread publication within the United States and other Western countries and the ease of transmission over international boundaries.

In view of the lifting of controls on the export of technological information shortly after the war, our restrictive policy is now being implemented largely by the voluntary actions of the exporters themselves, although compulsory controls are exercised to a limited extent for the legal protection of U.S. firms. Administration of technology controls is exercised by the Department of Commerce.

There exists a marked disparity of access to technology in the United States and the USSR where disclosure of technological data is considered a criminal offense under the State Secrets Act. Despite this disparity, however, it is generally accepted that, with few exceptions, the Soviet Union will continue to lag behind the United States in technological development.

(B) Finance

1. Economic Assistance. So long as the Soviet Government continues to pursue its present policies toward the United States, economic assistance to the Soviet sphere is out of the question. While limited economic assistance has been provided to Soviet-dominated areas in Eastern Europe in the past when such assistance has been clearly beneficial to the economies of the European Recovery Program participants, and not outweighed by benefits to the military potential of the Soviet sphere, it is not likely that circumstances will again arise which would warrant such aid to the Soviet bloc in the future.

2. Gold and Dollar Exchange. Available evidence indicates widespread use by the Soviet sphere of dollar exchange derived from its favorable balance of trade with the US and from sales of gold in premium markets to finance widespread illicit activity such as the circumvention of export controls with the West through the purchases of strategic materials for dollars; to finance subversive activities in Western countries; and for legitimate diplomatic purposes. Proposals to sterilize Soviet gold through modification of the U.S. gold purchase policy and through restriction of free gold trade abroad and to decrease Soviet dollar earnings through trade have been considered in the Department, but do not appear warranted at the present time.

(C) Claims, Debts, etc.

1. Lend-Lease

(a) Settlement for Wartime Lend-Lease. After repeated representations made by the United States both in Washington and Moscow, negotiations for a settlement of the Soviet $10,800 million wartime lend-lease account commenced on April 30, 1947, and are continuing spasmodically. The negotiations are limited to topics covered by the master Lend-Lease Agreement of June 11, 1942 and are directed primarily toward the question of compensation for materials and other assistance provided by the United States to the Union of Soviet Socialist Republics under the Lend-Lease Act during the war. The negotiations also include the question of obtaining the return to the United States of certain lend-lease articles, particularly certain naval craft, which are needed for use in the United States or which the United States desires be returned for security reasons. To date 7 war-built tankers and 1 old dry-cargo vessel, 27 frigates and 1 icebreaker have been returned. However, 2 remaining icebreakers which were supposed to be returned by December 1, 1949 are claimed to be stuck in the ice and no date of return has been specified by the Soviet Government. The United States position as to the various aspects of these negotiations follows in general the principles of settlements already concluded with other major lend-lease recipients. Although progress has been made toward agreement on certain issues, the major issue of overall compensation remains in dispute.

(b) Adjustment of Postwar Lend-Lease Agreement. Compensation for lend-lease articles supplied after the end of the war was provided for in the so-called Soviet Lend-Lease “Pipeline” Agreement of October 15, 1945.¹¹ Of the materials valued at $250 million available and scheduled for delivery under this Agreement, goods valued at $230 million were delivered. Delivery of the remaining goods valued at $20 million was terminated as a result of Congressional action. The Soviet Government has protested this termination as a violation of the Agreement and has submitted claims for damages. In making interest payments due under the Agreement on July 1, 1947, 1948, 1949 and 1950, the Soviet Government has withheld amounts reflecting reductions in principal resulting from these alleged damages. In making its payments of interest due July 1, 1948, 1949 and 1950, additional deductions were made by the Soviet Government as compensation for damages claimed to have resulted from United States denial of export licenses for private purchases. The United States position has been to accept tentatively the reductions reflecting damages resulting from non-delivery of items scheduled in the “pipeline” Agreement pending the outcome of discussions of the Soviet claims. The United States has rejected, however, the offset for damages resulting from denial of export licenses on the basis that claims of this nature are wholly unrelated to the matter of lend-lease interest payments.

2. Claims of American Nationals. Subsequent to the recognition of the USSR by the United States, negotiations were undertaken for the settlement of American claims arising out of seizures of property in the USSR. These negotiations were suspended in 1935 and have not been resumed to date. However, pursuant to the Litvinov assignments,¹² the United States has succeeded in collecting over 7 million dollars of pre-Soviet Russian Government assets in the United States which will be used in connection with any eventual settlement of these claims. With respect to Soviet seizures of American properties in the new Soviet territories and seizures of American properties acquired through inheritance since 1935, the United States continues to present requests for investigation of the status of such individual properties. In a note transmitted in August 1948,¹³ the U.S. requested the Soviet Government for an expression concerning its observance of its obligations under international law to provide just compensation for the seizure of American properties. To date, no reply has been received and no adequate responses are being given to our requests for information concerning individual properties.¹⁴

3. Soviet Debts. Substantially all of the debt of the Soviet Government to the United States Government arose from advances to the Provisional Government of Russia (the Kerensky Government) between July and November 1917 under the First and Second Liberty Bond Acts. The balance of the debt arose from sales of surplus war materials under the Act of June 9, 1918 and from sales of relief supplies on credit by the American Relief Administration under the Act of February 25, 1919. These sales were made subsequent to the fall of the Kerensky Government to the White Government of Admiral Kolchak which was never recognized by the United States. The principal amount of the above advances and sales totals nearly $400 million. In addition the United States has outstanding claims of about 4 million against the Chinese Eastern Railway and for protection of Russian interests in Turkey during the first World War. Accrued interest on these debts amounts to several times the principal amounts.

In January 1918 the Soviet Government published a decree repudiating all state loans and loans guaranteed by preceding Governments. Subsequent to recognition of the Soviet Government in 1933 an effort was made to negotiate an agreement for the settlement of debts and claims but these negotiations were discontinued without solution of the problem in January 1935, since which time the debt question has been considered a dead issue.

(D) Transport and Communications

1. Civil Aviation. Our civil aviation policy with respect to the USSR and its satellites, as approved by the National Security Council, is (1) to prevent the sale of aircraft and associated equipment to these countries and (2) within certain limits to contain the civil air operations of the USSR and its satellites. In connection with this containment policy, if it can be clearly determined that a fully realizable balance of advantage would result from a reciprocal exchange of civil air services with the satellite states after careful evaluation and weighing of the civil aviation, economic, political and military security considerations involved, efforts to effect civil air penetration of a satellite state on a reciprocal and short-term basis should be made by U.S. and friendly states. All but the minimum facilities necessary for the operation of satellite air services outside satellite territories as may be agreed to and for securing adequate facilities for non-satellite areas in satellite territories should be denied. This policy is being implemented through the cooperation of other friendly states on a “common front” basis.¹⁵ The Soviet Government is not a member of the International Civil Aviation Organization and is not expected to join in the foreseeable future.

2. Telecommunications. U.S. implementation of its international telecommunications policy is carried out primarily through the International Telecommunications Union, of which the USSR and all of its satellites in Eastern Europe are members. While satisfactory progress has, on the whole, been made in the I.T.U., the USSR has acted as a disruptive and retardative influence. The difficulties with the USSR are found in many specific areas but generally are most prevalent in international conferences. At the I.T.U. conference the Soviet Delegations have persistently interjected both technical and political obstacles.

3. Shipping, (a) In view of the relatively small size of the Soviet Merchant Fleet, little difficulty has been encountered with the Soviet sphere in the shipping field. The USSR has not participated in efforts to bring into being the Intergovernmental Maritime Consultative Organization or the 1948 Safety-of-Life-at-Sea Convention. The Soviet Government has enlarged its Maritime Fleet through wartime acquisitions under Lend-Lease and through reparations, etc., and is attempting to enlarge it further through new construction both in the USSR itself and in foreign shipyards. It is indicated that satellite ocean shipping, particularly Polish, is formally being taken over by the Soviet Government and that plans are under way for the formation of a world-wide Soviet shipping organization to serve the entire Soviet bloc.

(b) Immunity of Soviet Merchant Vessels in U.S. Ports. Since all Soviet vessels are Government-owned, under present U.S. policies they receive sovereign immunity in U.S. ports, whether engaged in regular commercial business or on official missions. This advantage is not accorded to privately owned merchant vessels of other nations. The Department has for several years been studying the possibility of limiting sovereign immunity of Government-owned vessels by granting such immunity on the basis of function rather than ownership. Soviet merchant ships may be denied immunity in U.S. ports should this criterion be established.

(c) Chartering of United States Vessels. The Soviet Government has from time to time since the war chartered U.S. flag vessels to supplement its own merchant fleet in transporting cargoes between Communist-controlled ports. In particular certain U.S. flag tankers have been chartered to transport petroleum from Costanza, Rumania, to Communist China. In keeping with a suggestion by the Department of Defense, the Department of State recommended to the Maritime Administration of the Department of Commerce that no U.S. flag vessels be chartered, without the specific approval of the U.S. Government, for the carriage of cargo of any kind to or from any of the following countries or areas: Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, the USSR, the Soviet Zone of Germany, North Korea or Communist China. The procedure recommended by the Department has been put into effect by the Maritime Administration. This will permit scrutiny and review of charters to countries in the Soviet bloc with the possibility in some cases of denial where the charter appears to be contrary to U.S. national interest.

(d) Inland Transport. Following a decision of the Council of Foreign Ministers in December 1946, a conference to work out a new convention for international freedom of navigation on the Danube was held at Belgrade, Yugoslavia, July 30–August 18, 1948.¹⁶ At this conference a convention proposed by the Soviet Delegation was approved by a majority of seven delegations from the Soviet bloc, including Yugoslavia. The U.S. and other Western Governments have firmly stated their inability to accept the Soviet-imposed convention which destroys the international character of the river, forces out of the administration all non-riparians, legalizes Soviet monopolistic control of the joint shipping companies, and, in general prevents the resumption of East-West trade. The Soviet convention has now been ratified by all of its signatories and has been placed into effect.

The U.S., the U.K. and France have affirmed non-recognition of the Belgrade Convention and have served notice that the previous Danube Convention of 1921 is considered to be in force for the entire river. Belgium, Italy and Greece have taken similar positions.

(E) Labor

1. Communist ideology based on the interests of the laboring classes continues to have strong appeal in that quarter. Although, recently, organized labor in the Western democracies has to a great extent disassociated itself from Communist-sponsored organizations and has openly aligned itself with the cause of free democracy as opposed to Communism, the ideological battle in the labor field has become more acute. In December of 1949, democratic trade unions repudiated the Communist-dominated World Federation of Trade Unions and organized the International Confederation of Free Trade Unions. It is the policy of the United States Government to lend maximum support to labor forces friendly to democracy not by propaganda attacks alone but also by encouragement of democratic labor in every possible form. One such form is increased collaboration and contact on international labor matters with United States labor leaders, who are now intensively active in the drive to counter Communist labor activities throughout the world. It is the policy of the United States to dispel the myth of the unique advantages to labor under the Soviet system by bringing the facts to light, especially as regards forced labor, lack of trade union rights and personal freedom, and comparatively low wages, long hours and other burdens of workers under Soviet domination.

(F) USSR Economic Relations with Other Countries

1. World Trade Relations. In the postwar period, the Soviet attitude toward efforts to establish a world system of non-discriminatory trade has changed from implied approval during the war period to indifference (1946) to active hostility (1947–50). The USSR has attacked the basic principles of the International Trade Organization as United States “economic imperialism.” The United States would not consider Soviet participation in the General Agreement on Tariffs and Trade and the International Trade Organization warranted unless such participation signified a genuine tendency on the part of the USSR to move toward a multilateral non-discriminatory and cooperative trade policy. Soviet policies toward foreign trade which have as fundamental tenets government monopoly of all trade and the drive for autarchy rely upon bilateral trade agreements. The Soviet system is incompatible with the basic principles of the International Trade Organization and the General Agreement on Tariffs and Trade. Hence any fundamental change in Soviet policies on foreign trade cannot be expected.

2. Economic Integration of the Eastern European Satellites. The USSR is carrying forward rapidly a program of integrating the economies of its Eastern European satellites and forcing these countries to rebuild their economies upon the Soviet model. The former agrarian satellites have been “encouraged” to industrialize and satellite agriculture is being collectivized. After refusing to permit the Eastern European satellites to join the Marshall Plan, the Soviet Union reacted to that plan by creating the Council for Mutual Economic Assistance (CMEA) within the Soviet bloc. The CMEA was founded ostensibly for economic mutual assistance among members of the bloc; it is, however, actually employed for the purpose of integrating the satellite economies and directing their operations in accordance with the needs of the Soviet economy. Effective economic unification of the satellites is still far from realization. When a unified Soviet bloc does emerge and the Soviet sphere presents a unified front in trading with the West, the West as a whole may find itself in a disadvantageous trading position.

3. ECE . The Economic Commission for Europe was designed to provide for the exchange of economic information within Europe and to assist in the reconstruction of the European economies through the allocation of scarce supplies and through aiding the expansion of intra-European trade. The USSR has disclosed very little economic information to the ECE and the satellites are now following the Soviet example. The Soviet bloc has utilized the ECE, as it has other international organs, largely as a propaganda forum against U.S. economic programs in Western Europe and Western export control policies. The U.S. favors the continuation of the ECE as beneficial to intra-European trade despite Soviet tactics.

(G) Miscellaneous

1. Fisheries. The Department is considering a proposal to resolve the Pacific Ocean Fisheries problems between the U.S. and the USSR by negotiations of a fisheries convention covering waters of the North Pacific Ocean and Bering Sea north of 47th parallel. The contemplated agreement would essentially be a self-denying arrangement whereby U.S. and Canada would restrict their fishing vessels to waters east of the International Date Line and USSR would restrict its fishing vessels to waters west of the Line. Many potential tensions exist in the area due to the proximity of the American and Asiatic coasts, each fringed by vastly rich coastal fisheries jealously guarded by littoral states. The area has been prolific in fisheries disputes for more than 100 years and is the locus of two of the three principal fisheries arbitrations in history. The partial solution offered by the Four Power Fur Seal Treaty of 1911 was ended by Japanese abrogation in 1941. United States policy is to revivify seal conservation arrangements and at the same time resolve other latent fisheries problems in the area by this single convention, coupled with a companion treaty between U.S., Canada, and Japan. Canada has agreed in principle with the proposed convention.

Indicative of the success and cooperation that such a convention might engender is the International Whaling Convention of 1946 to which, among other states, the U.S. and the USSR are parties. Co-operation by the USSR in this conservation agreement has been and continues of a high order.

2. Copyrights. The U.S. has in the past made overtures to the USSR for the negotiation of a copyright agreement to protect the works of their respective nationals in one another’s territories. The USSR has, however, evinced no interest in negotiating such an agreement. There is at present, therefore, no mutual copyright protection existing between the two countries. It would not appear likely that the USSR would participate in the multilateral copyright convention recently proposed by UNESCO.

1. Copies of interoffice memoranda attached to the source text indicate that this draft policy statement was prepared in the Office of Eastern European Affairs, and received working-level clearances by EUR, UNA, PD, UNP, P, TRC, and ITP, apparently during January, February, and March 1951. In a memorandum of March 14 to Edward S. Little (EUR), Jeffrey Kitchen (S/S–R) commented that S/S–R had circulated the draft policy statement on the USSR to interested areas for comment and suggestions.

   “In general the comments have pointed out that the statement was so ‘watered down’ as to place its usefulness in doubt. This raised the question in the minds of those commenting as to whether, in view of the special pre-eminence of the Soviet Union in all our policy thinking and planning, the Country Policy Statement might be an unsuitable vehicle for any overall presentation of US policy toward the USSR insofar as the necessity for withholding sensitive information might make it misleading as well as incomplete to eventual end-users”.

   In concluding Kitchen offered the opinion that the draft statement either be abandoned or be redrafted in the light of unfavorable comments and upgraded to Top Secret classification. In a memorandum of March 22 to Little, Reinhardt (EUR/EE) commented upon Kitchen’s memorandum. Reinhardt agreed that the draft statement might be abandoned in view of its incompleteness as a result of the failure to include many items of sensitive information. Reinhardt did argue, however, that the generalized policy statement was useful because:

   “it does contain in one single report many useful facts in regard to our relations and policies toward the Soviet Union as well as information concerning the policies and relations of the USSR with other countries.”

   No later draft of the policy statement has been found nor is there any record in Department of State files of a further discussion as to the relative merits of abandonment versus revision of the statement. It is presumed that further work on the paper was abandoned.

2. For documentation on U.S. efforts to counteract Soviet jamming of transmissions by the Voice of America, see Foreign Relations, 1950, vol. iv, pp. 261 ff.
3. A Russian language magazine, written, edited, and printed in New York by the U.S. Information Service. The magazine, distributed irregularly in the Soviet Union after January 1945, was aimed at presenting an unbiased picture of the United States and concentrated on topics of broad cultural interest. For documentation on the difficulties of distributing Amerika in the Soviet Union, see Foreign Relations, 1950, vol. iv, pp. 1074 ff.
4. For documentation on this resolution, see Foreign Relations, 1949, vol. ii, pp. 72 ff.
5. The reference here is to the action of the Soviet Union to cease participation in the U.N. Security Council so long as the Republic of China was represented in that body. For documentation, see Foreign Relations, 1950, vol. ii, pp. 186 ff.
6. See the Secretary of State’s letter to the President of the D.C. Board of Commissioners, Document 789.
7. The agreement was contained in an exchange of letters on November 16, 1933, between President Franklin D. Roosevelt and then Soviet People’s Commissar for Foreign Affairs Maksim Maksimovich Litvinov, signed in Washington at the time of the recognition of the Soviet Union by the United States, Foreign Relations, The Soviet Union, 1933–1939, pp. 29–33.
8. For a report on the visit, see telegram 713 from Moscow, September 15, 1950, Foreign Relations, 1950, vol. iv, p. 1248. See also Barbour’s memorandum of conversation, Document 819.
9. For documentation on the conclusion of the first commercial agreement between the United States and the Soviet Union on July 13, 1935, see Foreign Relations, The Soviet Union, 1933–1939, pp. 192–218; and for its renewal on August 4, 1937, see ibid., pp. 405–449.
10. Regarding U.S. action on June 23 to terminate the U.S.-U.S.S.R. commercial agreement, see Document 634.
11. For documentation on the conclusion of U.S. wartime assistance to the Soviet Union and the agreement of October 15, 1945, see Foreign Relations, 1945, vol. v, pp. 937 ff.
12. The Litvinov Assignment consisted of an exchange of letters between President Franklin D. Roosevelt and Soviet Foreign Commissar Litvinov on November 16, 1933, and their joint declaration of the same day regarding measures for the settling of outstanding questions of indebtedness and claims between the United States and the Soviet Union; for text, see Foreign Relations, The Soviet Union, 1933–1939, pp. 35–37. Under the terms of the Litvinov Assignment, the United States Government gained various property rights to intangible and other assets which the Soviet Government had claimed in the United States. The Soviet Government also waived all counterclaims against the United States.
13. The note was dated August 25, 1948; for text, see Foreign Relations, 1948, vol. iv, p. 911.
14. A 16-page paper entitled “U.S. Debt and Nationalization Claims Against the Soviet Union”, designated document RPTS D–2/la, January 27, drafted in the Office of the Legal Adviser in preparation for the projected Four-Power Exploratory Talks in advance of a possible session of the Council of Foreign Ministers, reviewed in some detail the background and current status of claims against the Soviet Union arising out of default of debts of the Soviet Union, or its predecessor governments, to the U.S. Government or its nationals and the nationalization, confiscation, or other takings of American property interests in the Soviet Union. The paper did not deal with Lend-Lease obligations. (CFM files, lot M–88, file—RPTS D1–D2) The debt question, particularly the status of the Litvinov Assignment, was also reviewed in some detail during a call by Assistant Secretary McFall and Truesdell (EUR/EE) upon Representative Abraham J. Multer of New York on September 14, 1951. Truesdells memorandum of that conversation is in file 261.1141/9–1451.
15. For a general review of U.S. civil aviation policy toward Eastern Europe and the Soviet Union, see Documents 616, 633, and 641.
16. For documentation, see Foreign Relations, 1948, vol iv, pp. 593 ff.