611.49/8–1553: Telegram
No. 42
The Ambassador in Czechoslovakia
(Wadsworth) to the Department of
State
60. 1. Prime Minister received me today for approximately two hours. Highlights his comment on aide-mémoire (Deptel 9, July 141) were:
He had discussed outstanding issues with my predecessor, including nationalization claims and steel mill specifically mentioned in aide-mémoire; my government would know Czech Government position thereon.
Aide-mémoire mentioned Oatis case; he had told me six months ago Czech Government “did not consider this case vital issue but rather excuse for US restrictive acts”. Since then Oatis had been released “in accord with Czech legal procedure and without any conditions attached”.
On other hand, prior thereto I had given assurances (see my note April 132) that following Oatis release “trade restrictions would be removed, flights over Germany resumed, et cetera”. He had however seen little sign of US Government desire re-establish normal relations; instead hostile acts against Czech Government has continued”.
Nevertheless, in spirit its basic policy of endeavoring contribute towards better understanding between peoples and world peace, Czech Government was prepared negotiate with US re these issues.
That said and aide-mémoire having mentioned specifically steel mill and nationalization claims, he would like learn from me US Government’s views these two issues.
2. In reply I first recapitulated measures we had taken following Oatis release to lift restrictions on trade and travel and, because of Prime Minister’s singling out overflights question for special mention, I added “I should be glad submit any specific request or proposal [Page 80] re this matter to my government.” This latter seemed satisfy him.
I then deprecated his reference to “hostile acts”; that was certainly not spirit in which my aide-mémoire was written. He commented: “Is it for me to tell you what constitutes lack of respect for international law, national sovereignty and normal diplomatic observances as shown by such acts as sending balloons? What would you say were we to do the same in Puerto Rico?”
Sending balloons, I answered, was certainly not hostile act by my government if only because it was Free Europe Group and not US Government which performed it. This point aside, however, what I wished to assure him of was that my aide-mémoire was written in all sincerity; my government hoped with equal sincerity I might find with him mutually beneficial solution outstanding economic issues.
3. I then asked if he had been informed that recent negotiations between his Ministry Foreign Trade and an American firm had progressed to point where firm had made substantial offer for steel mill; it was this fact which had prompted my request for early meeting; if this offer was agreeable to Czech Government, my government wished be as helpful as possible in facilitating disposition this matter.
Prime Minister answered he knew new offer had been received but not its details; would I tell him what I knew and explain how US Government could be helpful?
In reply I named firm, said it had offered $6,500,000 for steel mill not including $2 million equipment and wished answer in two weeks. I then outlined escrow procedure and argued that, if firm’s offer was in fact agreeable to Czechs, they would, especially in view urgency of taking decision thereon, find escrow procedure proof my government’s desire be helpful in general disposition this and other issues to benefit both countries.
Prime Minister followed translation my remarks closely, then said in substance: “I understand, but how would you feel? Our position is that, if we sell, proceeds are ours to do with as we may wish. Would you agree to anyone being able tell you what you could do with your money? As I see it, you wish to tie your consent to our using our own money to our agreeing to pay at least a part of it to you on account of your nationalization claims.”
He then recapitulated Czech Government position: Czech Government had bought mill; US Government had prohibited its delivery; morally therefore US Government should take over steel mill and reimburse Czech Government its full outlay. If this was impossible and Czech Government sold steel mill, proceeds should be its own, as US Government has recognized, to do with as it pleases, as US [Page 81] Government apparently does not recognize. Here, on Czech view, US Government was not only morally wrong but legally wrong as well, because only basis for US Treasury blocking order was in US laws on trading with enemies, and Czech, victim of German aggression, was not an enemy.
I answered that while I could understand Czechs would feel as he said, three facts remained: Firstly that US Treasury felt quite sure of its legal position; secondly that it was now four years since negotiations had been opened for settlement nationalization claims; and lastly that we were faced today by concrete situation of some urgency in which offer to buy steel mill had been made; if Czech Government wished accept, my government wished facilitate deal to best its present ability.
4. I then turned conversation back to aide-mémoire; it had been written before I even knew of this new offer to buy steel mill; I had welcomed his initial reply that, in interest peace and good relations, Czech Government was prepared negotiate re outstanding economic issues; my government hoped agreement of maximum scope might be reached. Had I, I asked, his approval that I seek such agreement by pursuing our present exploratory talk with Foreign Office or Ministry Foreign Trade?
He replied it would be better for me to talk with Minister Foreign Trade; he would see him tomorrow; then Minister, who would know details of steel mill offer, would talk with me early next week.
5. I ended conversation with reiteration sincerity your desire achieve general disposition all possible issues to benefit both governments. Prime Minister throughout seemed interested and responsive. At one point he said: “We have concluded agreements with practically all other countries for settlement their nationalization claims. We can do so with you too but only on similar terms. As President Zapotocky told you (see Embtel 340, January 203) it must be within framework our possibilities, hence on basic percentage our exports.”
6. I think it would be helpful if I could have Department’s initial reaction this telegram before I see Minister Foreign Trade.4
- Not printed. (611.49/7–1453)↩
- Not further identified.↩
- Document 19.↩
- The Department of State responded in telegram 30, Aug. 17, by instructing Wadsworth to avoid appearing too anxious concerning the sale of the mill and to attempt to persuade the Czechoslovak Government that the escrow arrangement would permit time for detailed negotiations on a general economic settlement. (611.49/8–1553)↩