Office of the Historian

97. Memorandum From the Counselor of the Department of State (Nimetz) to Secretary of State Vance1

Washington, July 6, 1977

SUBJECT

  • Czechoslovakia Claims/Gold

Kempton Jenkins and I called on Senator Russell Long on June 28 to obtain his “blessing” to resume our negotiations with the Czechs for the settlement of outstanding claims and the return of Nazi-looted gold which we currently hold.2

He did not accept our recommendation that we attempt to obtain from the Czechs a $32 million lump-sum settlement (50 cents on the dollar using Long’s calculations; 60 cents using ours). This amount had been floated last year in private negotiations by a US businessman, [Page 290] apparently with Long’s blessing.3 Long forcefully expressed his view that we should settle the problem by selling the Czech gold held in the US ($40–50 million) and paying off the American claimants. He reiterated his view that because the Czechs seized our property we have every right to seize theirs. He was not convinced by any of our standard arguments, to wit, that legal custody of the gold is shared jointly by us, the UK, and France, that many of the claimants are elderly and would be happy with partial settlements now while they are still alive, and that the time is favorable for obtaining a reasonable settlement with the Czechs.

I have asked L to examine the legal restraints on our disposing of the gold unilaterally. I will explore with EUR the political effects of this as well as other possible actions in light of Long’s extremely negative reaction to our proposal.4

  1. Source: National Archives, RG 59, Office of the Secretariat Staff, Mr. Matthew Nimetz, Counselor of the Department of State, Under Secretary of State for Security Assistance, Science and Technology, January 1977 thru December 1980, Lot 81D85, Box 1, MN Chron—Official—July–December 1977. Confidential. The Department also reported on the meeting with Long in telegram 159627 to Prague and Rome, July 9. (National Archives, RG 59, Central Foreign Policy File, D770245–0254)↩
  2. Senator Long wrote in a March 22 letter to Vance that, because of Czechoslovak intransigence on renegotiating the initial 20 million settlement of the claims, “my personal view is now that a settlement of twice $20 million would still not be half enough.” Long suggested that the United States unilaterally settle the claims by selling the Czechoslovak gold on the open market. (National Archives, RG 59, Office of the Assistant Legal Adviser for European Affairs, Country Files, 1950–1986, Lot 89D336, Box 11, Czech: Gold 74–78) Vance wrote Long on April 12, informing him that the administration’s review of policy toward Eastern Europe would also cover the issue of the Czechoslovak gold and that either he or Under Secretary for Economic Growth, Energy, and the Environment Richard Cooper would contact the Senator to discuss the Czechoslovak issue. (Ibid.)↩
  3. Reference is to private messages passed to the Czechoslovak Government (GOC) by David Scott, chairman of Allis-Chalmers and of the U.S. section of the U.S.-Czechoslovak Economic Council during his June 1976 trip to Prague. Scott, reportedly with approval from Senator Long, informed the Czechoslovak Government that the 1974 agreement would have to be renegotiated and that, in order to obtain congressional approval, at least $32 million should be paid to U.S. claimants. While the GOC initially dismissed the suggestion, the Embassy subsequently reported that GOC officials moved from stating that changes to the 1974 agreement would be “inadmissible,” to Foreign Minister Chnoupek’s statement that Prague was ready to start “renegotiations” on the gold/claims issue. (Telegram 3517 from Prague, December 14, 1976; National Archives, RG 59, Central Foreign Policy File, D760461–0368, and telegram 3518 from Prague, December 14, 1976; National Archives, RG 59, Central Foreign Policy File, D760461–0686)↩
  4. The Bureau of European Affairs drafted a response from Vest to Nimetz that recommended against seizing the gold. The memorandum was forwarded for signature on July 15. (National Archives, RG 59, Office of the Assistant Legal Adviser for European Affairs, Country Files, 1950–1986, Lot 89D336, Box 11, Czech: Gold 74–78) No memorandum from the Legal Adviser was found.↩