Foreign Relations of the United States, 1977–1980, Volume XX, Eastern Europe

103. Memorandum From Robert King of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, March 27, 1978

SUBJECT

• State Department Suggestion to Make a New Proposal to the Czechoslovak Government on the Claims/Gold Problem and Implement an Exchanges Agreement

At Matt Nimitz’s suggestion, a memo is being circulated in State that, if cleared, would be sent to Secretary Vance by George Vest recommending that the US present a new proposal to the Czechoslovak government to resolve the Claims/Gold issue and that a program document be negotiated which would permit the signing of the exchanges agreement with Czechoslovakia that was negotiated in 1976. Since the memo is being circulated in draft form at present, now is the time to make our views known before Secretary Vance is asked to approve these steps.²

With regard to the Claims/Gold issue, an agreement was initialled in 1974 calling for 41% payment on the claims, after which the US would return gold seized from Czechoslovakia by Nazi Germany and subsequently taken by the US, Britain, and France in 1945. Senator Long rejected the 1974 settlement as being too low. In talks with Ambassador Byrne (our man in Prague who was here in early March for consultations), Long said the Czechoslovaks should pay 100% plus interest and if they refuse, the US should vest the gold and pay the claims.³ This, however, would cause problems with the British and French who are members of the Triparte Commission for Restitution of Monetary Gold, and it would also create difficulties under international law. The Trade Act of 1974 requires any agreement on the Claims/Gold Issue to receive Congressional approval. Since Long’s refusal to accept the 1974 agreement, no movement has taken place on the question. State would like to initiate discussions with the Czechoslovak government in an attempt to secure an agreement on a higher settlement figure, which would then be presented to Congress for approval.

There are several thousand US claimants. The longer the issue remains unresolved, the lower the value of their claims. Both claimants and Congress have been critical of inaction on the issue since 1974. Although the Claims/Gold Question is an obstacle to better US-Czechoslovak relations, resolving it will not automatically lead to an improvement in relations. In this case, there are valid domestic reasons for attempting to solve it.

The decision to negotiate an exchanges agreement with Czechoslovakia was made by Kissinger in 1975 following the Helsinki conference. (Agreements with Hungary and Bulgaria were negotiated and entered into force in 1976.) Negotiations with Czechoslovakia were completed in December 1976, but the accompanying implementing program document was not completed because of criticism of the Czechoslovak government’s actions against the Charter 77 group. State now proposes that the implementing program be negotiated so that the exchanges agreement can come into force. The justification is that such an agreement will enhance our ability to establish contacts with Czechoslovak citizens, which are currently very limited. It would require probably two months to complete negotiations, and State would like to sign the agreement by June in order to use funds in the fiscal 1978 budget set aside for the program. State would handle negotiations and the signing in a low-key fashion in Prague in order to prevent its being seen as an endorsement of the Husak regime.

On balance there seem to be valid reasons to initiate new negotiations on the gold/claims question since American claimants are suffering from our inaction. Even if an agreement is reached it will require some time to achieve. Furthermore, it will not reflect endorsement of the Husak regime. The exchanges agreement, however, would reflect favorably on the Husak government and its supposed advantages to the US are, at best, marginal.

Recommendation:

That we make new proposals to the Czechoslovaks on the Claims/ Gold Question, but that we not sign the exchanges agreement at the present time.⁴

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 17, Czechoslovakia: 1/77–1/81. Confidential. Sent for action. Aaron wrote at the top of the memorandum “ZB—The idea is [to] reward them[?] for their [?] position [at] Belgrade.”
2. Not found.
3. See Document 102.
4. Brzezinski checked the “Disagree” box without further comment.