Foreign Relations of the United States, 1952–1954, Eastern Europe; Soviet Union; Eastern Mediterranean, Volume VIII

849.331/2–554: Telegram

No. 54
The Ambassador in Czechoslovakia (Johnson) to the Department of State

confidential

Prague, February 5, 1954—4 p.m.

301. Reference Embassy telegram 295.¹ At meeting with Foreign Minister, stated asked I call in order give me note regarding steel mill in which Czechoslovak Government is asking United States Government take necessary action permit consummation sale of mill to Argentina Government without making any economic or financial conditions. Foreign Minister then referred to “very extensive press campaign” with respect to sale of mill to Argentina, Czechoslovak Government feeling it necessary refute some of the points made in that campaign and to point out that the campaign was not conducive to the establishment of good relations. However, he “did not wish to state reason behind this press campaign”. In respect to other open financial and economic questions wished to stress Czechoslovak Government was “still willing to continue negotiations through appropriate diplomatic channels”. Minister thereupon handed me 12-page note (summarized immediately following telegram, full text by airpouch).²

Replied I would not take time Minister read note, but would, of course, transmit it to my government, inform him when in position make reply. I then reviewed my conversation with Prime Minister (Embassy telegram 285³) and asked whether note being given me today was Czechoslovak Government reply to Wadsworth’s August 14 aide-mémoire⁴ to Prime Minister. Foreign Minister evaded direct reply, but stated note being given me set forth “viewpoint Czechoslovak Government”. I then stated steel mill only one of several outstanding economic issues. While Czechoslovaks had strong interest steel mill, United States had major interest question compensation nationalized property. United States considered settlement latter question essential solution other economic issues and in point of the nationalization compensation by far oldest issue. I then reviewed history negotiations this subject pointing out numerous requests by United States renew negotiations, last being August 14 aide-mémoire. Appeared to me that essential question is whether Czechoslovak Government is willing negotiate on nationalization compensation and other outstanding and financial issues, as well as upon steel mill case. Foreign Minister limited self to replying that he was “privately of opinion” that solution of steel mill case could create conditions which would permit prompt settlement other outstanding economic and financial issues. With respect nationalized property, desired to make clear measures were not “discriminatory” against United States, but involved general re-organization of economic and satisfactory compensation agreements had been reached with other governments. As was clear, Foreign Minister had neither instructions nor information which would permit any fruitful discussion. I terminated conversation that point.

It is my opinion, text of note is largely work of Siroky, and represents what he considers reply promised our January 29 conversation, essentially note appears to be only reiteration Czechoslovak Government position of no negotiation on nationalization compensation, until release steel mill. After study of note, further Embassy comments will be transmitted early next week.⁵

Johnson

1. Telegram 295, Feb. 4, reported that Foreign Minister David had requested an interview with Johnson for what the latter assumed would be a discussion of economic matters. (849.331/2–454)
2. The summary of the note was transmitted in telegram 302, Feb. 6. (849.331/2–654)
3. Not printed. (249.1111 Hvasta, John/1–3054)
4. Transmitted in telegram 9 to Prague, July 14. (611.49/7–1453)
5. In telegram 327 from Prague, Feb. 13, Johnson transmitted a critique of the Czechoslovak note. While remarking that the note was not encouraging, Johnson recommended that the United States nevertheless attempt to use the steel mill blockage to reopen negotiations for the satisfaction of nationalization claims. (849.331/2–1354) Instead of accepting this recommendation, the Department of State responded in telegram 185 to Prague, Mar. 15, that the Department of the Treasury had decided simply to open bids for the sale of the steel mill. (849.331/3–1554)