611.49/1–2053: Telegram

No. 19
The Ambassador in Czechoslovakia (Wadsworth) to the Department of State


340. (1) Following are highlights my conversations had during past week when making initial official calls on Soviet Ambassador Bogomolov, Prime Minister Zapotocky, Vice Foreign Minister Sekaninova and Chief Foreign Office American Secretary Pudlak. Embassy Counselor, Political Secretary and I estimate their overall result is at best only outside chance Foreign Office may be willing seek with us at last partial resolution current Czech-American issues, including Oatis case.

(2) To Bogomolov (who possesses all qualities Soviet proconsul) I outlined objectives my mission very much along lines I used with Foreign Minister Siroky and President Gottwald (see Embassy despatch 233, December 291) emphasizing that I hoped I might succeed on working level despite major East-West differences; and I frankly asked his advice to how I might best proceed.

Department will be interested his reply which was in substance:

(a) We, i.e. US Embassy, do not intervene in Czech internal affairs and (b) As Czech Government has concluded trade agreements with other western governments, e.g. Belgium, which envisage settlement nationalization claims, it would seem that, assuming mutually attractive trade proposals, similar US–Czech trade agreement would be in order.

Having, however, read Stalin’s recent Economic Problems of Socialism in the USSR and noted particularly that “things will soon reach the stage where these (i.e. Soviet) countries will have no need to import goods from capitalist countries” we have our fingers crossed.

3. My discussion with Prime Minister Zapotocky was far more interesting; Embassy officers and I believe it most significant exposition Czech policy yet heard since degeneration US–Czech relations following Oatis trial. I report his remarks on basis brief notes taken during conversation, he himself having taken notes during my presentation as follows:

Despite our differences on high political level re Atlantic Pact and similar problems, Czech Government view is that trade relations with West can exist. Among such problems is included the [Page 36] question, “Is war inevitable?” My view is same as Stalin’s, namely “no.”

However, US Government must recognize that blockade harms both parties, namely he who blockades and he who is blocked. This recognized, trade between us can be encouraged but only if within framework normal relations, namely, if economic rather than political objectives be sought by US Government and if, as in all matters mercantile, they be to mutual advantage.

This means also that Czech Government, while accepting principle of compensation for nationalization, must insist, because it has no gold or available foreign exchange, that payment of compensation be only in form percentage total binational trade, e.g. as prescribed in recent accord with Belgium.

As to other facets our deteriorated relations, my frank and sincere view is that all are connected, whether we like it or not, with Oatis case. While we hold his sentence was proper, this does not mean it cannot be commuted, as in Dutch and other cases.

“As to Mrs. Oatis’ petition,2 I would not consider it proper to grant it at this time.” (Note: These were exact words as translated to me by excellent interpreter.)

In our view this Oatis case has become political question because of US Government actions, e.g., in denying Czech planes right overfly Western Germany. Consequently, it has become “matter of prestige” to both sides. “Solution will be difficult but we must try to find a way out.” (Note: I asked “How?” Prime Minister finessed as follows.)

Oatis sentence was not primarily revenge against him as an individual but rather a warning to others, namely, to other foreigners. Consequently, it is not really important that he be held.

Instructions were given our Foreign Minister to discuss all this with your predecessor, Mr. Briggs. Therefore, despite all difficulties, I believe we can maintain relations.

As to steel mill we must, of course, accept payment its value. We recognize existence present international tensions; your law re strategic materials is a consequence thereof. Hence, if international situation cannot be changed, we must accept its consequences and recognize that only [garble] of value of mill and not its physical delivery is possible.

As to all these and other questions (Note: I had mentioned also travel and blocked accounts) you should seek settlement with Foreign Office, but your task will be difficult because of lack of confidence on both sides. It will not be easy for one side to agree to do [Page 37] something on simple promise of the other to do something else later on.

For instance, even were your government to arrange renewal overflights Czech airplanes, how could we be sure your military authorities in Western Germany would not three or four months later on another pretext prohibit them again?

Here Prime Minister ended his answer to my opening presentation, then added, seemingly with less sincerity and as hardly more than an afterthought for the record: “And with your NATO and Marshall Plan policies how can you expect us to have confidence?” I answered as he rose to terminate visit that, if I could find on working level with Foreign Office formula agreeable my government, he need have no doubt as to our living up in letter and in spirit to all undertakings.

4. Two days later when paying first courtesy calls on Sekaninova and Pudlak, I told them briefly of foregoing conversation and asked that the serious thought to working out with Embassy formula I might submit to Department. Sekaninova as I am told is her wont was wholly noncommittal except in saying that should I wish to discuss any matter with Foreign Minister she was “sure he would receive me as he had always received my predecessor.”

5. In pressing my point to Pudlak my seemingly most effective approach was along following line: Let’s compare our differences to woven rope; to unravel it we must start at one of its two ends; one of these is basic economic approach i.e. let’s get our trade relations back on even keel and, then, we will have framework for settling nationalization claims, for granting visas necessary travel to both countries by US and Czech business representatives (if Oatis case settled by his expulsion, as petitioned by his wife, under Czech law), for re-authorizing over-flight Western Germany of Czech civil airplanes and for mutual unblocking financial accounts (e.g., on our part, such Statni Bank monies in US as are clearly property Czech Government and, if steel mill sold in US, proceeds such sale [garble] on Czech part, FLC and US Army crown accounts).

Other end of rope, I continued, might be this very matter of blocked accounts; if we could agree on this point perhaps we could then work backwards towards general trade understanding within overlapping sectors our respectively restricted foreign trade possibilities, US sector being necessarily limited qualitatively by US law prohibiting export strategic materials (e.g. steel mill) and Czech sector being even more limited (quantitatively) by state planning which envisages for 1953 80 percent total exports to Eastern [garble] (as against percentages which increased from 30 to 70 during years 1947 to 1952).

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6. In later connection I ventured suggest to Pudlak that I felt I could properly recommend to Department that it grant diplomatic immunity to Czech Government funds in New York branch Statni Bank if he could guarantee thereafter free Embassy drawings against FLC credit.

Embassy would particularly welcome Department’s authorization for Counselor King to pursue this line with Pudlak if, in fact, Department is disposed grant such immunity. If we are correct in our estimate, to succeed in breaking deadlock we must have Department’s assistance. One side must be first to give; and we see no sign Czechs willing do so.

7. Believe Department better able than we to estimate foregoing report. In a way I have stuck my neck out while playing this overture by ear; but I have compromised no fundamental principle or policy. At same time, in overriding interest Oatis case, I have taken some very dirty cracks re our world policies, limiting my answers largely to hope “we might agree to disagree on such matters and get down to business.”

I shall take no further action except under Department instructions unless, as seems improbable, Foreign Minister asks me to call for further discussion.

  1. See footnote 2, supra.
  2. Not found in Department of State files.