51. Telegram From the Department of State to the Embassy in Poland0

829. Embtels 934 and 941, Embdesp 239.1 Dept aware considerations discussed reftels and Embdesp re Polish use exchange rates. However issue not in these terms but whether possible conclude agreement which will avoid discontinuance Treasury rate. In this connection Dept has persistently sought negotiate such agreement. No indication given Poles to date that agreement possible at official rate. Various alternatives tried including Embassy suggestions and others despite increasing indications including Trampczynski and Cyrankiewicz statements to Ambassador that Polish position firm. Possibility finding solution limited by dollar repurchase provision which represents important U.S. interest we not prepared sacrifice. In PL 480 negotiating session Dec. fifth Lychowski made clear that Polish position absolutely inflexible and that much as commodities needed agreement could not be signed at rate other than 24–1.

Dept considers important recognize realistic alternatives. Now fully clear that Polish position can only be tested by explicit refusal conclude agreement which does not permit preservation Treasury rate or other rate above 24–1. If Polish position actually as claimed this can only result in failure conclude agreement with inevitable major consequences to U.S. policy. After repeated and vigorous efforts which Dept has made since August to alter Polish position, and in view possible consequences, we satisfied that risk not justifiable. Dept therefore plans conclude agreement o/a fifteenth even if no concession exchange rate obtained.2

As stated Deptels 770 and 7963 Dept has been fully aware consequences termination Treasury rate and preparing do everything possible cope with effects official expenditures and personnel. Every effort being made avoid injury Embassy operation and programs. Allowance structure to be altered promptly upon rate change with establishment post allowance. Detailed instructions follow.

  1. Source: Department of State, Central Files, 611.4841/12–461. Confidential; Priority. Drafted by Wortzel; cleared by EE, FN, by AID and EUR/EX for the last paragraph, and by Blumenthal and the Department of Agriculture; and approved by Vedeler.
  2. Regarding telegram 934, see footnote 4, Document 49. Telegram 941, December 4, analyzed Polish approaches to the question of the zloty exchange rate. (Department of State, Central Files, 611.4841/12–461) In despatch 239 from Warsaw, November 29, the Embassy reported on negotiations over the zloty exchange rate. (Ibid., 611.4841/11–2961)
  3. For text of the agreement, signed on December 15, see 12 UST 3065.
  4. Documents 48 and 49.