249.1111 Oatis, William N./5–2852: Telegram

No. 9
The Ambassador in Czechoslovakia (Briggs) to the Department of State

top secret

821. Purpose this telegram is survey Oatis negotiations in broader perspective, supplementing previous messages, especially those beginning Embtel 737, Apr. 15.1 Immediate possibilities include:

Stalemate. On April 15 Foreign Minister Siroky declared “steel mill blocking order must be settled before considering other matters”. This cuts across our Feb 14 proposal2 last paragraph of which declares after Oatis case settled, US Govt prepared discuss financial problems including steel mill. For nearly six months Czechoslovakia has ignored our representations about Oatis (except access) and has failed reply or show any indication interest in Feb 14 proposal. During same time Siroky has made great to-do over steel mill, his May 22 note insisting proceeds remain unblocked and demanding “immediate and unconditional access to funds”.3 There is thus possibility of continuing impasse and while I believe we eventually would win on this front, eventually might mean [Page 22] some time, especially if mill remains unsold. (Foregoing not intended imply our note replying Czechoslovak May 22 note should not be along line suggested Embtels 816, May 27 and 819, May 284).
Alternative possibility might be “package deal” involving simultaneous acceptance by Czechoslovaks of our Feb 14 Oatis proposal, and by US of plan based on Siroky May 22 proposal.
Respective agreements concerning Oatis and financial matters would be separate but made simultaneously providing for acceptance our Feb 14 proposal and for accepting Czechoslovak May 22 proposal with important proviso that entry into effect of financial arrangements would take place say 30 days after exchange of persons.
Financial arrangement would consist of release proceeds mill against Czech agreement deposit 8 percent beginning that date, with negotiations for detailed claims settlement to be undertaken in Praha immediately.

It has always been Dept’s position that once Oatis case settled other problems susceptible to adjustment. Furthermore, primary objective in blocking steel mill last January was to force Czechoslovaks reach agreement on nationalization claims, which objective wld have been achieved. In end, cost to Czechoslovakia in lost trade will have far exceeded present value of mill which Czechs may recoup under proposal. Consequently, Embassy’s suggestion does not imply retreat from position of no ransom for Oatis.

Whether two-step package deal can be sold Siroky, of course, remains be seen. From his point of view arrangement offers obvious advantages including ability tell Cabinet primary Czech objective holding Oatis had been reached, namely funds for steel mill unblocked.

There are, of course, variants of foregoing but in no case do I believe we should agree to anything short of release Oatis as first step.

In this general connection I desire again suggest consideration of our next moves would be facilitated by my proceeding to Washington for consultation.5

  1. Not printed. (249.1111 Oatis, William N./4–1552)
  2. See footnote 1, Document 6.
  3. In reply to the U.S. proposal of May 10, Široký sent a seven-page note of rejection to the Embassy. (Telegram 459 to Praha, May 2; 249.1111 Oatis, William N./4–1752) A summary of the note was transmitted in telegram 812 from Praha, May 24. (249.1111 Oatis, William N./5–2452)
  4. Both telegrams recommended against allowing the proceeds of the steel mill sale to appear to be used for a ransom payment for Oatis’ release. (249.1111 Oatis, William N./5–2752 and /5–2852
  5. Briggs returned to Washington for consultation in mid-June. For a record of his conversation with President Truman on June 18, see infra.