Foreign Relations of the United States, 1961–1963, Volume XX, Congo Crisis

179. Telegram From the Department of State to the Embassy in the Congo1

Washington, December 22, 1961, 1:50 p.m.

1098. Following is program put economic pressure on Tshombe. Separate telegram contains your instructions regarding implementation.2

Program to put economic pressure on Katanga requires prior consultation among US, Belgian, British Governments and UN. Program consists of three stages: (1) stage one measures to be taken immediately; (2) stage two measures for implementation as soon as is made feasible by progress effectuating first stage; (3) stage three contingency measures for implementation if and when previous actions seen to be insufficient.

Intention first stage this program place Tshombe’s financial supporters in financial and legal jeopardy threatening Katanga government future loss tax receipts and foreign exchange earnings. First stage measures have effect only revert to fiscal and foreign exchange control status of Loi Fondamentale.

Stage one measures are: (1) In order to establish that transfers by companies to Katanga government do not discharge their tax and dividend obligations to Congo Government, following needed:

(a): Reopen Congo’s pre-independence company-tax assessment office in Belgium.
(b): Reopen Congo’s pre-independence customs office at Antwerp to assess duties on commodities destined for import by Katanga.
(c): GOB promulgate fiscal ruling that Belgo-Congolese companies discharge income and dividend tax obligations under Belgian law only upon presentation evidence Congo part of assessed tax actually received by GOC.
(d): GOC legislation legally closing customs posts, tax and Treasury offices located in Katanga.
(e): GOC legislation making all Congo direct taxes including all chapters impots sur les revenues and dividends owing Congo portfolio legally payable only at Treasury office Léopoldville.

(2) In order to establish that sales of foreign exchange proceeds by Katanga exporters to Katanga national bank do not discharge legal obligations under Congo foreign exchange regulations, following needed:

(a): Congo Monetary Council circulate announcement to all central banks specifying existing regulation under which all foreign exchange earnings Congo residents and firms located in Congo must be sold to Monetary Council and requesting advice balances held abroad by Congo residents; British, Belgian and US Government and GOB insure respective central banks notify their financial communities existence this circular.
(b): Congo Monetary Council enforce existing foreign exchange regulations requiring Congo commercial banks sell to Monetary Council all foreign exchange acquired by their Katangan branches.
(c): GOC and GOB restore pre-independence authority of agency in Belgium to effect repatriation to Congo foreign exchange earnings of Belgo-Congolese companies.

(3) In order to establish GOC authority over companies operating in Congo, following needed:

(a): GOB immediately collect all dividends and other earnings owing on all securities contained in Congo portfolio.
(b): GOB exercise voting rights associated with portfolio in accordance GOC instructions during period portfolio in GOB possession.
(c): GOB and GOC initiate negotiations for transfer Congo portfolio to GOC soonest.
(d): GOB initiate legal action to speed liquidation Comite Special du Katanga and transfer CSK porfolio to Congo portfolio soonest.

(4) In order to convince Katanga authorities new sources financial assistance not available, following needed:

(a): US, British and Belgian govts notify respective international investment houses their official view inadvisability marketing Katanga public security offerings or facilitate management Katanga govt accounts.
(b): US, British and Belgian govts discuss with Swiss govt desirability similar announcement to leading Swiss banks.

Stage two measures are:

(1): At soonest date activate Congo tax offices in Belgium, transfer Congo portfolio to GOC, transfer CSK assets to Congo portfolio, GOC exercise portfolio voting rights in Forminiere, UMHK and other companies to obtain termination their financial collaboration with Katanga govt.
(2): GOC terminate payment part salary to Belgians employed by Katanga govt and subject to Belgian technical assistance program.
(3): GOC initiate legal action abroad to seize overseas assets of companies operating in Katanga in arrears tax obligations to GOC and failing sell foreign exchange earnings to Monetary Council.

Third stage measures are:

(1): US, British and Belgian Govts advise nationals depart from Katanga.
(2): ONUC assist enforcement Congo law in Katanga employing UN forces close tax offices, customs posts in Katanga and branches and agencies Katanga national bank; interrupt exports and imports on which customs duty not paid to GOC.

Ball

Source: Kennedy Library, National Security Files, Congo Cables. Confidential; Niact. Drafted by Robert L. West of the Office of Central African Affairs, cleared by Williams and in draft by Ball, and approved by Vance. Also sent to USUN, Brussels, and London and repeated to Bermuda for Rusk and to Paris.↩
Telegram 1108 to Léopoldville, also sent to Brussels, London, USUN, Paris, and Elisabethville, December 22, stated that as long as there was hope that Tshombe would live up to the Kitona agreement, no approach should be made to obtain the Congolese legislation envisaged in stage one of the program outlined in telegram 1098, but other steps in stage one should be initiated at once. The telegram instructed the Consulate in Elisabethville to inform Tshombe of the plan as soon as the Embassy in Brussels reported a favorable Belgian reaction and to warn him that it would be implemented if he did not carry out the Kitona agreement in good faith. It also instructed the other recipient missions to enlist U.K., Belgian, and U.N. cooperation in the plan and to seek French diplomatic support. (Department of State, Central Files, 870G.00/12–2261)↩