94. Memorandum From the Assistant Secretary of State for European Affairs (Kohler) to the Under Secretary of State for Political Affairs (Merchant)0
SUBJECT
- Status of Economic Assistance and Nationalization Claims Negotiations with Poland
It is my understanding that the Operations Coordinating Board has expressed an interest in our current negotiations with Poland with particular reference to our present tactic of withholding additional economic assistance until lump-sum agreement is reached in the claims negotiations.
The claims negotiations began in Warsaw in March 1959. At the outset of these negotiations it was made clear to the Poles that we could not consider further economic assistance until agreement was reached on the lump-sum the Poles should pay for American property nationalized or otherwise taken by the Polish Government.
In spite of our position in this matter we responded to urgent pleas by the Poles and in June 1959 signed agreements totaling $50 million and again in November an “emergency” agreement amounting to $11.8 million. The June agreements concerned the sale for Polish currency of surplus wheat, barley, corn, cotton, soybean oil and dry milk and a line of credit of $6 million for the purchase of poliomyelitis vaccine and for the payment of ocean transportation costs of the agricultural commodities. The November agreement concerned the sale of 200,000 tons of feedgrains.
On December 23, 1959 the Economic Minister at the Polish Embassy called at the Department to make another urgent request,1 this time for 600,000 tons of wheat. According to the Economic Minister, it was important that negotiation of a wheat agreement begin immediately for two reasons: 1) the need for additional grain would become acute in Poland toward the end of March 1960 and 2) for Polish internal political reasons it was necessary for the US to make some gesture of friendship in order to increase the latest Polish offer for a lump-sum settlement. [Page 266] The Department responded favorably to this request and wheat negotiations began December 28, 1959.2 It was made very clear to the Poles, however, that by opening these negotiations we expected an increase in Poland’s lump-sum offer and that we would not sign a wheat contract until lump-sum agreement had been reached. The Poles were further informed that in view of the number of times in recent months that we have met their urgent requests we would consider it an act of bad faith if they pressured us for signature of the wheat contract before agreement had been reached on the lump-sum.
We are not very far apart on the lump-sum at this time. Ambassador Beam opened in March 1959 with a figure of $125 million and the Poles replied with an offer of $20 million. The latest meeting in Warsaw occurred on January 7, 1960 and Ambassador Beam indicated we would accept a sum over $40 million.3 The Poles have come up to $38 million but assert this is their maximum. However they had reached $38 million before we agreed to begin the wheat negotiations and we hope that they now will be able to increase their offer. In our view if the Poles will come up to $39 or $39.5 million we should agree. Mr. Dillon has taken an active part in determining the Department’s positions in these negotiations and he will want to approve the final settlement figure.
- Source: Department of State, OCB Files: Lot 61 D 385, Poland General. Secret. Drafted by Sherer and cleared in draft by Harold C. Vedeler, Director of the Office of Eastern European Affairs, and by Katz.↩
- The memorandum of conversation, dated December 23, between Lychowski and Sherer is Ibid., Central Files, 411.4841/12–2359, and in the Washington National Records Center, Warsaw Embassy Files: FRC 65 A 160, 500.8 Nationalization 1959: US-Polish Claims Talks.↩
- No record of this response by the Department of State has been found.↩
- Telegram 1091 from Warsaw, January 8, describes this meeting. (Department of State, Central Files, 248.1141/1–860)↩