59. Telegram From the Department of State to the Embassy in Germany1

154242. Ref: Bonn 11211.2

Czech situation under close consideration. Contingencies involving possible Czech appeals to US for economic support have been studied. Under present legislative restrictions (no aid, PL-480, Exim loans or guarantees, MFN tariff treatment), regrettably our ability to respond in such circumstances is limited. Also this connection Czechoslovakia is substantial supplier of arms to North Viet-Nam.
Major US-Czech issue of gold/claims settlement remains. Czechs have indicated they will respond negatively to our November 1967 proposal for settlement this issue.3 We will carefully consider Czech response but are not prepared to consent, as Czechs desire, to release Nazi-looted Czech gold until there is satisfactory settlement of US financial claims. Gold is our only effective leverage for such settlement.
With regard possibility West European countries, including FRG, extending financial assistance to Czechs, we would encourage such action.
Our position on Czech developments is to make clear informally and discreetly to Czechs on appropriate occasions that we welcome steps they are taking toward liberalization. We believe it advisable to avoid any steps at this time likely to embarrass new leadership in its internal course or its delicate relationships with Soviet Union and other EE neighbors.
When appropriate, you may inform FRG and others of our position. Western Embassies here well briefed regarding our position and legislative limitations vis-á-vis financial assistance to Czechoslovakia.
  1. Source: Department of State, Central Files, POL 15 CZECH. Confidential. Drafted by Batjer; cleared by Lisle, L, and E; and approved by Stoessel. Repeated to Prague, London, Paris, Moscow, Warsaw, Sofia, Budapest, Bucharest, Belgrade, Brussels for Petrow, USNATO, and Berlin.
  2. Telegram 11211, April 24, reported German Foreign Ministry comments on Czechoslovakia’s financial position. (Ibid.)
  3. See Documents 52 and 56.