Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

276. Memorandum From the Ambassador to the German Democratic Republic (Ridgway) to Secretary of State Shultz¹

Washington, December 1, 1984

SUBJECT

• Next Steps in East German Claims/Trade Negotiations

Over the past fifteen months I have been engaged in the development of a proposal to resolve the longstanding issue of the payment of claims by the GDR to the Council for Jewish Material Claims Against Germany on behalf of victims of the Nazi Holocaust, and to the USG on behalf of American citizens and nationals whose property has been taken. This issue has been with us since 1974, and has been consistently described by the USG as important to our national interests and central to our responsibilities to our people. I was authorized by Larry Eagleburger to take up the matter on a personal, nonbinding, informal and exploratory basis with as wide a group of interested parties—interdepartmental, interagency, Congressional, and East and West German—as would be necessary to refine a proposed solution for future consideration and decision.

As I mentioned during our conversation the other day,² I was to go as far as I thought necessary, leaving it to me to hear the sound of the saw at the end of the limb. In fact, strong interest in the effort (and perhaps a bit of fascination laced with incredulity) has fostered an entirely supportive atmosphere. With rare exception, even those who reserved the right eventually to say no to the proposal have assisted in its development.

I believe the exploratory, personal phase is now over. What follows reflects the result of my effort and provides, I believe, a reasonably dispassionate presentation of the proposal for its more formal consideration by others.

The Proposal

Having taken into account the informal views of staff from L, EB, HA, STR, NSC, Commerce and the Hill, as well as the CJMC (henceforth called also “the Jewish claims group”), the proposal has five parts:

— The GDR agrees to pay the Jewish claims, at levels and over a period of time acceptable to the CJMC;

— The GDR agrees to pay the USG official claims, at levels and over a period of time acceptable to the USG;

— In response to the claims settlements, the USG agrees to a trade relationship with the GDR, defined in a bilateral agreement, the period of which is keyed to the payout period for the claims settlements;

— All three documents are subject to annual review, consultation, and possible termination for failure to meet reciprocal undertakings;

— All three documents are concluded but not signed until:

— The passage of legislation by Congress stating that, “Notwithstanding the provisions of the Trade Act of 1974” (Jackson-Vanik), a list of specific products from the GDR will be accorded Category I tariff treatment for a period of years the same as those in the claims agreements. This would also be subject to annual review and, if it is the will of Congress, termination;

— A GDR human rights performance that is measurably improved;

— An indication from the FRG that it believes this overall approach—the settlement of claims and agreement on a limited trade relationship—advances humanitarian interests in the field of emigration.

Why This Particular Approach?

— In the past, the USG has been able to force governments against which it had claims to settle up by seizing assets within our reach and using them, after negotiations which were legally face-saving for both parties, to pay claimants. Thus, our 44% settlement with the PRC, and our 126% settlement with Czechoslovakia, represent, in fact, 100% takings by the USG of everything we could get hold of. By contrast, there are no East German “assets” within our reach.

— The CJMC leadership developed the concept of a claims payment to be reciprocated by trade relief and in 1981 requested Administration and Congressional support for it. Mac Baldrige and Lionel Olmer, with whom I have discussed the proposal before us, are persuaded that support for the CJMC concept probably could not be withheld. They are prepared to consider our broader approach on the basis that, if we have to go this way anyhow, let’s solve our own claims problems, too.

— In my conversations on the Hill, which have covered representative House and Senate members and staff, there is sympathy for the Jewish claims (on the House side a word from Rabbi Miller might well carry the day; the Senate is less clear), a willingness to look at a broader approach, but a sense as well that any “package” would have to make a bow to the spirit of Jackson-Vanik.

— The conversations I have had with the East German leadership, and the counterparts designated to meet with me on the same “personal, non-binding, etc.” basis, reveal an absolute unwillingness to assign any value to that part of our differentiation policy that says improved performance will be followed by unspecified rewards. As you have heard me say in other meetings, their reaction is much the same as a used-car-lot customer asked to pay $5,000 first, only then to learn which car on the lot has been purchased. As you also have heard me say before, I make no case for the attractiveness of the GDR regime, but I find it difficult not at least to nod when they ask, what are, in fact, the “rewards.” This proposal puts the rewards on the table along with the elements of “improved performance.”

— Additionally, lacking much positive experience dealing with each other, the various elements of the proposal are listed so that each party can protect its interests after signature.

The Decision to be Made

I believe we have reached the point at which State must decide whether—

— it wishes to move ahead, changing the character of the effort from personal at least to “State”;

— if the proposal enjoys State support, how should we proceed to present it formally to other agencies? I know that STR has reservations, and all others who have helped out have been promised a crack at saying yes or no to the total package once it was put together, as it now has been.

Other Elements

— “Differentiation” policy: There are those who believe the proposal is inconsistent with NSDD.54.³ I believe it is entirely consistent with overall policies towards Eastern Europe. The GDR would not move ahead of Hungary and Romania, who have full MFN. (MFN is more than tariff relief on selected items. We have told the GDR that MFN is out of the question. I for one cannot imagine testifying in favor of it while the Wall still stands.) As a matter of philosophical interest, I have in any case been assured by the responsible NSC staff members that NSDD.54 did not purport to fix a particular constellation of relationships among the Pact countries. This view apparently is now shared by everyone.

— Rabbi Miller and the CJMC spokesmen believe the proposal will not be opposed by the major American Jewish organizations. Rabbi Miller believes the Conference on Soviet Jewry will not be interested; the American Jewish Committee is pleased with recent developments concerning the very small Jewish community in East Germany. There will be those, however, who will oppose, as they have before, any CJMC settlement with East Germany as being “blood money.” Others will oppose the administration of the claims payment by the CJMC. The problem here will be to get an accurate measure of opinion without undercutting Rabbi Miller and without getting caught up in arguments about how the money is spent.

Conclusion

— I believe the proposal we have identified is do-able;

— I believe there is a substantial body of positively inclined interest across Washington and up and down the avenue for it, though that interest naturally could increase or diminish as specific terms emerge;

— I believe the East Germans are prepared to negotiate the elements of the package seriously with us and with the Jewish claims group.

— I believe there also will be opposition to the proposal. I think it can be made manageable, but it cannot be ignored.

1. Source: Department of State, Executive Secretariat, Sensitive and Super Sensitive Documents, 1984–1989, Lot 92 D 52, ES Sensitive December 1–6, 1984. Confidential. McKinley initialed and wrote “14 Jan” on the memorandum.
2. No memorandum of conversation of this meeting was found.
3. See Document 18.