103. Editorial Note

The final phase of the U.S.-Polish negotiations of a claims settlement opened in Washington on April 26 and proceeded concurrently with separate discussions about economic matters. Stanislaw Raczkowski, Financial Counselor of the Polish Embassy, and Harold C. Vedeler, Director of the Office of Eastern European Affairs, served as chairmen of their delegations. At their first meeting, they discussed the draft claims agreement and decided to submit certain matters to a working group. At their second meeting on May 11, they discussed their differing views on the amount and frequency of the Polish payments. At an informal claims meeting with Vedeler on June 15, Raczkowski said his government had now abandoned linking the annual lump-sum payment to the volume of exports to the United States. Vedeler conveyed the idea informally that if Poland could not pay the lump sum in 15 years, it should submit an offer to pay the sum in 20 years. A copy of the memorandum of conversation, dated April 26, outlining the discussion at the meeting is in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500.8 Nationalization 1960: U.S.-Polish Claims Talks. Copies of telegrams 1224 and 1391, May 14 and June 15, which outline the discussions held on May 11 and June 15, are in Department of State, Central Files, 248.1141/5–1460 and 248.1141/6–1560.

U.S.-Polish discussions about economic matters resumed on April 27 with Edwin Martin, Deputy Assistant Secretary of State for Economic Affairs, and Tadeusz Lychowski, Economic Minister of the Polish Embassy, heading the delegations.

At the first meeting on April 27, the Polish delegation made the following aid requests: a 3-year aid program; the abolition of the “Dollar Clause” in all P.L. 480 agreements with Poland; a new P.L. 480 agreement to provide primarily grains, cotton, and fats; most-favored-nation treatment for Poland; the provision of certain industrial plants and equipment; and a technical cooperation program within the aid agreement. The delegations agreed to set up two committees, one to discuss P.L. 480 and the other to discuss industrial requests. The Committee on Agricultural Commodities met on May 3, 10, and 24 and the Industrial Committee met on May 5, 16, and 23. Copies of the minutes of all these meetings, and the first general meeting on April 27, are in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500 Aid/Poland 1960: US-Polish Talks.

After more than 6 weeks of talks, Lychowski called on Martin on June 14 and said that the negotiations “were going well with only three points on which we were not in agreement, none of which he thought should be considered major.” The most important of these was the question of dollar repayment for the P.L. 480 sales. Martin reported that [Page 284] Lychowski “used every argument he could think of to persuade me that the US should make some concession from our present position, pointing out that it was really no negotiation because I refused to negotiate but stood firm on the initial position.” Martin agreed to consult other U.S. officials on Lychowski’s proposals, but he avoided giving encouragement that they would be accepted. A copy of the memorandum of conversation, dated June 14, which outlines Martin’s conversation with Lychowski, is in Department of State, Central Files, 411.4841/6–1460.

With both the claims talks and the P.L. 480 talks stalled in mid-June, Lychowski requested a joint meeting of the delegations since the Polish side was anxious to conclude the negotiations. At the joint meeting held on June 20, Lychowski expressed the desire to bring the repayment conditions of previous P.L. 480 agreements into line with those of agreements concluded by the United States with other countries, although he understood the “legal obstacles” to doing so at the present time. He presented some alternatives that either mollified, modified, or reduced the severity of the terms of the repayment clause.

With regard to the new P.L. 480 agreement, Lychowski accepted the fact that a 3-year agreement was not possible at this time. He said the Polish side was willing to postpone for another year building up reserves so as not to prejudice the amount of the Export-Import Bank agreement and stated it was essential to have an assurance of an Export-Import Bank credit in the next fiscal year of at least $25 million. Discussion of other matters, such as technical cooperation, would be postponed.

Raczkowski remarked that if the United States could accept all these proposals, the Polish representatives would “do their best” to obtain authorization for repayment of the claims over 20 years, as the United States wished, instead of 25 years as the Poles were officially offering. Lychowski hoped to have the U.S. reaction to his proposals by the end of the week. Martin reiterated the Department’s reluctance to modify the existing terms beyond the proposal that already had been made to lengthen the terms of repayment. A copy of the memorandum of conversation, dated June 20, of this joint meeting is Ibid., 248.1141/6–2060.

The Polish negotiators exerted great pressure on the United States side to respond promptly to their proposals. Edward Iwaskiewicz, Commercial Counselor of the Polish Embassy, told Katz at a private luncheon on June 21 that Gomulka had recently indicated a strong distaste for requesting agricultural imports from the Soviet Union and that Gomulka’s position at an upcoming meeting of the Communist leaders in Bucharest would be strengthened if the United States gave its response [Page 285] on the P.L. 480 proposals as soon as possible. A copy of this memorandum of conversation, dated June 21, is Ibid., 611.48/6–2160.

On June 22, Lychowski, in a meeting with Martin, announced that he “could give assurances that there were very good prospects” of the Polish Government’s agreeing to a 20-year term on the claims agreement if a reasonably satisfactory answer could be secured on P.L. 480. He asked that “we give him broad outlines of our position by tomorrow afternoon so that Gomulka could have it before he leaves for Bucharest.” Martin answered that “we would do what we could,” but that he could not make any promises. A copy of the memorandum of conversation, dated June 22, is Ibid., 411.4841/6–2260.

That same day, June 22, Katz and Assistant Secretary Foy Kohler prepared a memorandum for Under Secretary Dillon that contained the broad outlines of a U.S. reply to the various Polish suggestions of June 20. Their recommendations included: examining, with the Polish Government, Poland’s payment obligations under the P.L. 480 agreements, “it being understood that there is no commitment as to the position we might take;” amending the first two P.L. 480 agreements to provide for payments over 35 years; and offering a new P.L. 480 agreement with a maximum market value, including ocean transportation, of $125 million. The memorandum noted that the United States could not provide an assurance regarding a new Export-Import Bank credit. A copy of the memorandum, dated June 22, is Ibid., 248.1141/6–2260.

Dillon approved these recommendations on June 23. Although there is no record, the Polish Embassy was apparently informed of the decision the same day so that the information could be transmitted to Gomulka. Some minor modifications were approved by the Bureau of European Affairs and by Dillon and communicated to the Polish Embassy on July 1 by Martin. A copy of Martin’s memorandum of conversation, dated July 1, with Lychowski is Ibid., 411.4841/7–160.

On July 16, the United States and Poland signed at Washington an agreement relating to the settlement of claims of U.S. nationals against Poland. The agreement provided for a lump-sum payment of $40 million to be made in 20 annual installments of $2 million each beginning January 10, 1961. For text of this agreement, see 11 UST 1953. Documentation on the negotiations leading up to this agreement are in Department of State, Central Files 248.1141 and 411.4841, and in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500.8 Nationalization 1959: US-Polish Claims Talks and 500.8 Nationalization 1960: US-Polish Claims Talks.

The recommendations of Katz and Kohler, plus some minor changes, were embodied in the P.L. 480 agreement that the United States and Poland signed in Washington on July 21. It provided for the sale to Poland of agricultural commodities of a total value of $130 million. Pursuant [Page 286] to the terms of Public Law 480, the United States agreed to sell Poland surplus agricultural commodities for local currency for that amount, which would be deposited to the credit of the U.S. Government and available for its use. The amount also included certain ocean transportation costs. For text of this agreement, see 11 UST 1887.

The two governments also signed on July 21 “The Record of Positions,” printed as Document 105.