69. Editorial Note
The claims negotiations continued in Warsaw in April. At the third meeting on April 8, Beam advised Polish representative Kotlicki that the U.S. Government had a lump-sum figure of $125 million in mind, with payments spread over a number of years. He reiterated that it was advisable for Polish experts to come to Washington, and the Polish side indicated a willingness to send two officials.
The balance of the discussion at the third meeting and at the fourth meeting on April 20 was concerned with a definition of the terms of reference for the Polish officials who were to be sent to Washington. The major issue was the apparent desire on the Polish side to examine and verify the 5,000 claims that the United States had estimated as allowable. Ambassador Beam made it clear that it would not be consistent with the exchange of notes of June 7, 1957, to attempt to verify and discuss the merits of individual claims.
At the fifth claims meeting on April 25, Kotlicki remarked that both sides seemed in agreement but he wished to state the Polish understanding that since the lump sum would be determined principally by large claims, these should be discussed in more detail. When the Ambassador remarked that requesting any evidence from the large claimants would involve them in the negotiations, they both agreed such involvement was not desirable. Beam then presented to Kotlicki a paper that outlined the U.S. position on the negotiations. Since they agreed that this paper constituted an informal understanding, Kotlicki said the Polish experts would leave immediately for Washington.
A copy of a memorandum from Livingston T. Merchant, Assistant Secretary of State for European Affairs, to Dillon, April 24, giving a [Page 179] status report on the first four meetings of the claims negotiations is in Department of State, Central Files, 248.1141/4–2459. Copies of telegrams 1306, 1357, and 1389 from Warsaw, April 9, 20, and 26, which summarize the discussion at the meetings of April 8, 20, and 25, respectively, are Ibid., 248.1141/4–959, 248.1141/4–2059, and 248.1141/4–2659. A copy of telegram 1387 from Warsaw, April 25, which contained the U.S. paper, is Ibid., 248.1141/4–2559.
In a memorandum dated April 24 to Dillon on the subject of the economic and claims negotiations with Poland, Merchant reported that the economic discussion with Poland had progressed to the point where a decision was required as to the scope and size of an economic program. He wrote:
“In view of the progress in the claims talks, and the need to make a decision promptly on further steps in the economic talks, we propose that an economic program for Poland now be approved, involving (1) a PL 480 Title I program and a credit from MSP funds which, taken together, would be about the same total amount as last year, and (2) a statement of our readiness to extend MFN. It is felt that, if we do not extend credits until a claims agreement is reached, or if we substantially reduce the amount of the credits on the grounds that the claims agreement has not been signed, this would have an adverse political effect in Poland, and would probably be counterproductive to our effort to secure a prompt and satisfactory lump-sum agreement. United States assistance at a level approximately equivalent to the previous amount would confirm to those elements within Poland who favor stronger ties with the West that they have the undiminished support of the United States.
“… In order to meet their urgent needs, the Polish representative has pressed for a PL 480 program of about the same size as last year’s, plus a credit administered by the Export-Import Bank so that they can pay for the ocean freight cost of transporting PL 480 commodities.” (Ibid., EE Files: Lot 76 D 232, Polish Claims)
In a memorandum to Dillon dated May 1, Beale and Merchant wrote concerning a partial program for Poland totaling $50 million comprised of Public Law 480 Title I and Mutual Security Program (MSP) funds. The memorandum reads in part:
“Failure to give concrete evidence at this time of our continuing interest in helping Poland to meet its needs would have an adverse political effect in Poland. A program to help Poland meet its urgent needs at this time would confirm to those elements within Poland who favor strong ties with the West that they have the continued support of the United States. We therefore feel that it is essential in furtherance of our policy objectives to undertake an economic program for Poland at this time of at least $50 million. In order to secure maximum effectiveness in furthering the development of U.S.-Polish relations, we believe that our credits should be on a continuous basis, and directed toward helping to meet their current needs. We recommend that the proposed program of $50 million be regarded as preliminary, and that additional assistance [Page 180] be extended before June 30, 1959, assuming satisfactory progress in the claims negotiations. It is also noted that you would be prepared to recommend Presidential approval of extension to Poland of MFN at a suitable time when such action will further progress toward a lum-sum settlement of claims.”
Dillon crossed out the words “further progress toward” in the last sentence and wrote “assure achievement of” in its place. Beside the next to last sentence, he wrote, “Only if negotiations succeed.” On May 5, Dillon approved the recommended economic program for Poland, which was to be proposed in the economic talks. It consisted of a P.L. 480 agreement of $44 million and the allocation of the Mutual Security funds of not more than $6 million to cover ocean transport costs of P.L. 480 commodities, plus approximately $2 million for polio vaccine. A copy of this memorandum is Ibid., Central Files, 411.4841/5–159.
At the fourth meeting of the economic assistance negotiations on May 6, Beale announced the U.S. Government proposal for a limited program of economic assistance to meet the immediate Polish needs. He indicated that the program was subject to a formal Presidential determination regarding the use of $6 million from the contingency fund for ocean transportation and purchase of polio vaccine. Beale also said that that the emergency program was “without prejudice” to the possibility of an additional economic assistance program. Lychowski indicated that he would transmit the program to Warsaw for approval immediately. A copy of the minutes of this meeting, dated May 6, is in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500 Economic Matters 1959: US Aid to Poland—Talk and Position Papers.
Between May 4 and May 28, U.S. officials held 15 meetings of technical talks on Polish claims with two claims experts from Warsaw, Franciszek Hofmokl and Zbigniew Rzepka. George W. Spangler and John Czylak of the Legal Adviser’s Office conducted the negotiations for the United States. In summarizing the talks for Beam, Deputy Under Secretary of State for Political Affairs Murphy wrote that the talks had been mutually profitable and that the Poles had gained a better appreciation of the magnitude of the task. Copies of the minutes of the 15 meetings of the technical talks are Ibid., 500.8 Nationalization 1959: U.S.-Polish Claims Talks. A copy of Murphy’s telegram to Beam summarizing the talks, telegram 1219 to Warsaw, May 30, is in Department of State, Central Files, 241.1141/5–3059.
On May 22, Lychowski called on Foy D. Kohler, Acting Assistant Secretary of State for European Affairs, to review the current status of U.S. economic assistance to Poland and the claims negotiations. Lychowski stated that even though the interim P.L. 480 agreement would soon be signed, it was clear that no additional MSP funds from [Page 181] the fiscal year 1959 budget would be available to Poland if the conclusion of a claims agreement and a further economic assistance agreement were linked. The Polish Government could not admit any connection between claims and aid, and the blame in Poland for not concluding a claims agreement sooner would be placed on the Americans. He said that since there was no possibility of a claims agreement before August, and if further economic negotiations were delayed until that time, it would cause political difficulties in Poland. Kohler said that he would officially deny any link between claims and aid, but as a practical matter, “we all realize that is the case.” When Kohler asked if the Polish Government had a lump sum figure in mind, Lychowski replied negatively. Kohler then said it was up to the Poles to come forward with a proposal that would reflect the agreed conclusions of the experts. In a conversation with Albert Sherer on May 26, Lychowski was told that his government should not expect the United States to grant any further economic assistance or most-favored-nation treatment until the stumbling block of U.S. claims had been eliminated. Copies of the memoranda of these conversations, May 22 and 26, respectively, are in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500.8 Nationalization 1959: US-Polish Claims Talks.
On June 10, the United States and Poland signed an economic agreement in Washington, which was composed of credit and sales agreements for a total of $50 million. Under the agreements, the United States agreed to sell to Poland for local currency, pursuant to the terms of Public Law 480, surplus agricultural products of $44 million, including the estimated transportation costs for products moved in U.S. vessels. The United States agreed to provide Poland with a credit through the Export-Import Bank of $6 million to finance the purchase of $2 million worth of polio vaccine and part of the ocean transportation costs of the agricultural commodities. For text of this agreement, see 10 UST 1058.