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

313. Letter From the Assistant Secretary of State for European and Canadian Affairs (Ridgway) to the President’s Assistant for National Security Affairs (Powell)¹

Washington, July 22, 1988

Dear Colin:

John Whitehead has told me of his conversation with you² concerning the further development of the East German initiative. He said he told you a memorandum³ was on its way and that you were willing to reconsider your current opposition to proceeding with our negotiating scenario.

As I have been a principal player in the development of the scenario since 1983,⁴ I have decided to abuse your hospitality, so to speak, by doing the enclosed rather lengthy review of this initiative, hoping you will find a moment to go through it.

In the meantime, the situation is this:

In 1984, after months of consultation in Washington and pursuant to agreement among Secretary Shultz, Mac Baldrige, and Clayton Yeutter, I was authorized to tell the East German government that the U.S.—

— was prepared to work with it to develop, on an ad referendum basis, agreements

— resolving the USG’s official claims against the GDR,

— providing trade facilitation,

— to be accompanied by

— legislation to overcome tariff barriers on a list of selected items,

— demonstrable progress on human rights and emigration which would meet the spirit of Jackson-Vanik, and

— in association with the private claims of the Conference on Jewish Material Claims against Germany, an agreement settling those claims also.

— I was to expressly state that the U.S. holds the view that in principle its claims should be paid as should the Jewish claims. Nonetheless we were willing to expand the negotiations in order to place on the table and develop the interests of the East Germans in trade, provided it was understood that Congressional approval would be needed in view of Jackson-Vanik.

That is the authorized proposal still on the table between the United States and the GDR.

Here is where we are. There is a draft U.S. claims agreement with blanks where the numbers should be. There is a draft Jewish claims agreement with blanks where the numbers should be.4 The East Germans were informally provided the text of a trade facilitation agreement in 1984 and in 1987, an illustrative list of items that might be available for more favorable tariff treatment, vetted by Commerce for political sensitivity. These documents are all linked in a scenario that foresees their simultaneous conclusion.

There is no relationship between the amount of trade and the amount of claims and there is no relationship between the rate of payment of claims and the rate of expansion of GDR trade. This reflects two points. We have told the East Germans we will steadfastly reject becoming their export marketing agents in the U.S. in order to receive our claims payments. Second, I think I have more experience on claims negotiations (outside of the lawyers in our claims division) than anyone else currently in Government, including having to pick up the pieces after Congressional rejection of a 1970’s agreement with Czechoslovakia, which had at its heart a formula which made the annual claims payments a percentage of the annual increase in new trade. No one wants to repeat that experience.

The authority for further developing the trade part of the scenario apparently rests with USTR and requires the support of the TPRG. The East Germans have made clear they will go no further on the initiative without a better picture of what the trade package will look like. The TPRG chaired by Mike Smith is of the view that it has no interest in the comprehensive U.S./GDR scenario and that in terms of trade policy alone it has no interest in proceeding. The NSC staff has been represented in the TPRG deliberations and has supported this outcome.

What we need to know is whether the U.S. is prepared to proceed with the development of the trade side of the ad referendum scenario so that at the end of the day the two governments, looking at the whole package, can decide whether they wish to proceed or abandon the effort. So far the answer from the trade side of the Administration house has been, no. There seems to be no machinery in the Executive Branch for putting the question to a broader group. We are not simply on hold. We are now saying, we don’t want to go ahead with the USG’s own initiative so we can see whether “on balance” there is an outcome favorable to our interests which would also enjoy support on the Hill. If that answer is final, no harm will have been done to our principled position on claims which has remained intact throughout. There will be some embarrassment that we have withdrawn from a scenario developed by interested parties in Congress and the Jewish community and agreed to by the Administration and then presented with some enthusiasm to the East Germans. I am sure we can all survive this.

Of course, the USG claims will not be paid. They have not been for 40 years. The Jewish community may decide to proceed without us and, I presume, the Administration will have to oppose their efforts.

Sincerely,

Rozanne L. Ridgway⁵

1. Source: Reagan Library, Stephen Danzansky Files, Subject File, GDR: 07/22/88–09/14/88. Confidential.
2. No memorandum of conversation for this meeting was found.
3. Attached but not printed. See Tab A, Document 314.
4. See footnote 3, Document 308.
5. Ridgway signed “Roz” above her typed signature.