51. Telegram From the Embassy in Czechoslovakia to the Department of State1
55. 1. As Department will have noticed, current international situation seems to have furnished Czechs with new pretext for hardening official attitudes toward US in recent weeks.
2. We have the impression that the regime in its immediate outlook is motivated by purpose of isolating and ostracizing the US, and even insulting and humiliating us. Another fact is perhaps regime’s frustration stemming from US failure to liberalize trade (MFN) and to take other steps in the economic/financial area. FonMin hard-liners have gone so far as to represent return of looted Czech gold as a make-or-break issue.
3. Czechs apparently feel they can pursue their present course with impunity because of recent successful effort to acquire international respectability. For them this is what Montreal is all about2 and they actively push same goal in exchanges of state visits with our Western allies. Against this background what they appear to seek especially from the US as still readily attainable is a continuation of scientific and academic grants for selected Czech nationals in pursuit of technological know-how. We know Czech authorities attach considerable importance to such programs. They have taxed British with not coming anywhere near the some 200 grants (official and private) extended to Czechs in US.
4. I believe that without entering on any irreversible steps and certainly without altering our present visa and tourist policies, we should be thinking about how we might scale down the advantages Czechs derive to a level more consistent with state of bilateral relations they have imposed.
5. Starting with US Government grants, we should review those of predominantly Czech benefit mostly in physical and engineering science with a view to a selective non-renewal for successor candidates. Word that time and atmosphere are not opportune could also be discreetly passed to some of US academic groups sponsoring ambitious programs for Czechoslovakia. Even though some exchanges of special interest to us might suffer, the message would soon get across to authorities here that they cannot continue with their present policies without paying a price.
6. It might also be wise to discourage prominent American visitors from coming to Czechoslovakia for prestige purposes until such time as [Page 177] there are signs they will be properly received. Our government spokesmen, and especially those on speaking trips throughout US, could perhaps counter Czechoslovakia’s more blatant distortions of fact on international and bilateral issues in a manner which would get back to policymakers here. External media, including VOA, could also play a part.
7. On other side of the coin and specifically with reference to economic relations where we may shortly confront Czechs again, I recommend we proceed in a straightforward manner, not only as a matter of equity but also wise expediency. Our suggested approach has been set forth in a series of messages, in particular Prague’s 1642, April 5,3 and we feel strongly that demands for a substantially higher figure on claims would be unattainable and counterproductive. We would not expect Czechs to accept every offer the Embassy has proposed (thus placing US domestic embarrassment of an immediate return of gold under present international conditions), but effort would at least help deflect a head-on clash while affording an opportunity of engaging Czechs in faith so discussion of a settlement that would be feasible and fair. [sic] We have promised to follow up on their March request for return of gold and I hope that our response will not be much longer delayed.
8. In short, while believing we should match Czech actions by bearing down in some of political and prestige areas first mentioned, we think our long-term interests would be safeguarded by showing for our part we are amenable to this type of businesslike approach, including such pragmatic initiatives as bilateral air agreement and continuing alleviations in trade.