Foreign Relations of the United States, 1964–1968, Volume XVII, Eastern Europe

99. Airgram From the Embassy in Czechoslovakia to the Department of State¹

A–902

Prague, November 29, 1968.

SUBJECT

• US-Czech Relations in Time of Transition

Despite its depressing progress the turnabout in Czechoslovakia has not yet come to a definitive conclusion and may still be susceptible to positive influence.

Below are offered some tentative opinions and suggestions dealing in outline with some of the problems which may arise during the transition period through which both the US and Czechoslovak administrations are passing, each in its different way.

The Present Scene

The setting is provided in the story of what can and did go wrong in a unique attempt to reform a Communist system. The abuses of the 1950s and of the Novotny regime cried out for inevitable correction. Even the Soviets apparently recognized the more obvious inefficiencies and were prepared to admit change. When Novotny’s control disintegrated about a year ago, pent up pressures and reactions broke loose which became more than the means of getting rid of a repugnant personality but grew rather into a movement with sweeping objectives. For this credit (or in any event, responsibility) goes to the media people, intelligentsia and some worker elements (almost all Communists) who first supported and then impelled the successor leadership on uncharted paths. The new leaders were composed of well-intentioned Party officials whose hands were relatively clean and many of whom had suffered from Stalinist excesses but who in part were inexperienced in national politics and not especially well versed in an understanding of power. A flowering of demands for reform of all kinds—economic, the rehabilitation of persons injured by the past, proposals for drastic federal reorganization—all added up to a burden which a strong stable leadership would have found it hard to carry out even if unmolested from the outside.

In shorthand, the main components which challenged the Communist system—and no experiment has yet been permitted to show whether Communism can survive changes of this kind—were: (1) abolition of censorship; (2) almost unlimited freedom of travel abroad; (3) voting by secret ballot with some choice among candidates; (4) a measure of freedom of assembly and association; (5) a ceding of Party dominance to allow a form of parliamentary rule in which other groups could effectively join; and (6) a more tolerant view of East/West confrontations over Germany and the Middle East. An emphasis on human rights was a by-product of all these aims, giving larger meaning to the principle of rule by law.

The short-lived Action Program, which was propagated by Communists who had no idea of abolishing total public ownership, was beginning to create a sense of participation, bringing the Party popular credit for the first time in decades. For whatever reasons the Soviets intervened—whether for fear of contagion in other countries or because they saw Czechoslovakia eventually slipping away from their strategic control—their brutal invasion compounded the shock of being deprived of a promised new way of life.

The shape of politics remains unsettled, even after the last November 14–17 plenum. The Soviet-supported elements on the one hand seek to push reform back into the mold envisaged a year ago, namely that it should lead to a correction of abuses—largely economic—within an orthodox framework. (It is interesting that prominence is now being given to moderate administrators such as Strougal and Cernik who were mentioned as potential leaders at that time and who probably would have succeeded to Novotny’s positions if the Slovak political revolt had not brought Dubcek to the top.) On the other hand the movement to fulfill the larger aspirations of giving Communism “a human and democratic face” still strongly survives. Even with Dubcek becoming more of a fading symbol, it remains a factor in the continuing political struggle.

For the nearest future we are largely limited to efforts outside Czechoslovakia. Although unsolicited, our sympathy and continued concern can encourage the hard core of popular resistance without being provocative. This may be important in stiffening the backs of the leaders who probably have more to fear from direct Soviet bullying than from pressures by their conservative opposition, which is publicly discredited and acts chiefly in response to Soviet instigation. As the Soviets seek to bend the Czechs to their will, we should publicize instances of interference and repression of human rights.

Even having been stifled, the Czechoslovak reform experiment will have an enduring effect on inter-Communist relationships and the Soviet world position. The manner of its repression has impaired Soviet standing to our advantage. With due consideration to specific matters of US-Czechoslovak interest, that advantage can best be pursued by keeping alive world concern over Soviet methods and by encouraging positive Czechoslovak internal forces.

Bilateral Issues

The timing for a reactivation of bilateral relations depends somewhat on the course of the internal political struggle but more importantly upon the establishment of the government which will emerge from this process and the effects of federalization. Both are unlikely to assume clearer form until early next year. In the area of foreign policy the Czechs may now be expected to follow an unswerving Soviet/Warsaw Five line, but given Czechoslovak minimal influence in foreign affairs, this is not of major consequence to us, except with respect to their aid to North Viet-Nam, which again may be a matter entirely of their own choice.

Historically, US-Czech relations have been difficult since the war (nationalization of foreign property and Benes’s Pan-Slavism were obstacles even before the Communist takeover). Czech officials describe current relations as poor and show little wish for improvement except in fields of unilateral advantage to them. Although contacts were easier during the period of high reform, the benefits to us were largely indirect since the attention of the leaders and their supporters remained focussed on internal affairs. A need for friends where they can be found these days has produced a moderation in anti-American polemics and a politer tone of discourse, but the regime retains its essentially Communist outlook towards the US.

A complex of intractable economic/financial problems form the hard core of present difficulties, consisting mainly of the following elements:

(1) Our refusal to return some $20 million of Nazi-looted monetary gold until a satisfactory settlement of US nationalization claims is reached. The gold, which is held tripartitely by the US, UK and France, cannot be set off directly against the claims but it is still our main bargaining counter.

(2) The claims themselves amount to a US-adjudicated value of $72 million on which we are prepared to accept a $44 million payment. The matter is complicated by an $8 million loss sustained through the enforced sale by us to another country of a steel mill which the Czechs had purchased in the US and paid for in 1947. Another embarrassing circumstance for us is the fact we signed a paper in December 1961 recommending acceptance in principle of a settlement releasing the gold in return for a Czech payment of $11–12 million on claims.

(3) Restoration of most-favored-nation treatment which was justifiably withdrawn from Czechoslovakia under 1951 conditions is now a sore point with the Czechs who denounce their exclusion as a discriminatory act.MFN is of course tied up with future East/West trade policy but its restoration to Czechoslovakia either separately or in conjunction with its extension to certain other Eastern European countries would seem necessary to enable the Czechs ultimately to pay for a claims settlement of the order we now insist upon. It will be recalled that just prior to the August invasion, US government approval had been obtained for a proposal whereby the Czechs would receive the gold upon payment of an installment on claims and would remit the balance up to an agreed total figure of $44 million in further annual installments following the restoration of MFN. Realistically the Czechs are probably as aware as we of the difficulty we would face in offering MFN before a resolution of Viet-Nam, but a formula of the kind previously approved (possibly leaving the final claims total to be determined when MFN is negotiated) would permit a reopening of discussions on an equitable basis which in turn would remove a major obstacle to even tolerable official relations.

As regards other issues and projects affecting Czechoslovakia, their character can be identified by mention in the list of recommendations below. Their general purpose is to establish and maximize US influence within the limits posed by the fact Czechoslovakia is a Communist state now subject to a greater degree of Soviet control. In keeping with the approach suggested in this message, priority is given to political acts or gestures which might help preserve reformist gains, with other steps to be taken conjointly or to follow appropriately as conditions evolve.

Recommendations

(1) That the US maintain an active watching brief, indicating through opportune public statements and use of all media resources that we are closely following events in and affecting Czechoslovakia, especially signs of further Soviet interference and a curtailment of the benefits originally promised in the spring Action Program. News of the type now fully covered by the Western press is doubly effective when played back to Czechoslovakia, both in putting the Soviets on the defensive and also in stimulating popular pressure upon the leaders here to resist. Meanwhile we should continue to treat Czechoslovakia as a sovereign state until proven otherwise by nullifying Soviet actions.

(2) That we proceed with exchange programs, showing our willingness to maintain and expand programs in which there is mutual interest. While two-way exchanges do not resolve basic problems they have helped create a better atmosphere, even though such is not acknowledged by Czech officials.

(3) That we let it be known we will continue existing channels and modalities of trade under recently suggested more liberal export licensing procedures. Items with a critical interest can be scrutinized more closely, and in borderline cases assurances can be demanded that products are intended solely for non-military use and not for re-export.

(4) That barring incidents and local disturbances before next spring, we then cease discouraging private travel, in order not to penalize the local tourist industry in which some US firms also have an interest.

(5) That we proceed with the plan for the payment of US social security benefits, this being a decision which it would be difficult to withdraw. At the same time we should not be reluctant to urge that this step, whereby the Czechs will profit from some $5 million in back payments and about $400,000 in continuing annual payments, entitles us to favorable consideration for the settlement of some of our outstanding accounts.

(6) That when the Czechoslovak federalized government takes shape in the spring, we consider presenting a gold/claims proposal along the lines of that approved in August. It should be amply clear to the US parties that they have small prospect of receiving final satisfaction of their claims until MFN is restored to Czechoslovakia, and in turn the Czechs should know that this event is unlikely to take place until Viet-Nam is no longer an issue. As for the return of the monetary gold, it would not be out of place to assure ourselves it would return to Czech and not Soviet custody.

(7) That with the elevation of Slovakia to a federal state, we plan to reopen our consulate in Bratislava in the course of next year on a reciprocal basis permitting Czechoslovakia a consulate in the US.

(8) Finally, we should, in New York as well as in Prague and Washington, encourage this regime, so long as it includes individuals who in any significant degree represent the aspirations of the Czechoslovak people, to develop a discreet dialogue with us. In retrospect one of the Dubcek regime’s more significant oversights may have been the apparent lack of an “American policy” (except of course to seek return of the gold). Naively believing that failure to cultivate the US would reassure the Russians, Prague did not attempt a “Romanian gambit” (i.e., giving an impression of friendly ties with the US), and thus perhaps contributed to Moscow’s assumption that mutual disinterest existed between Prague and Washington. To the extent the Czechoslovaks now or later attempt to remedy their lack of private dialogue with us, we should lend sympathetic and, when appropriate, high level ears.

Department please pass as desired.

Beam

1. Source: Department of State, Central Files, POL CZECH–US. Confidential. Drafted by Beam.