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

405. Telegram From the Department of State to the Embassy in Czechoslovakia and the Embassy in the United Kingdom¹

246323.

Washington, September 16, 1981, 0206Z

SUBJECT

• Czechoslovak Claims/Gold: Aide Memoire to UK and G.

1. (C—Entire text)

2. On September 15 Ambassador Ridgway called in Czechoslov Ambassador Johanes and British DCM Fretwell for separate discussions of options confronting U.S. and others given current state of play on claims/gold. She handed them identical texts of aide memoire transmitted below.

3. As the aide memoire makes clear, we are near the eleven hour in our effort to resolve satisfactorily the Czechoslov claims/gold issue. On September 14, over the opposition of the Departments of State and Treasury, the Senate Finance Committee reported out the Moynihan bill² to seize and sell the “Czech gold”. By pre-arrangement between committee chairmen, the bill has been referred to the SFRC for 12 days, following which it could be brought to the Senate floor at any time. The move by the SFC was primarily tactical—to pressure the British and the Czechoslovaks—but it reflects rapidly growing sentiment among interested parties on the Hill and counsel for the claimants that the claims issue must be resolved, one way or the other, this year, in this session of the Congress.

Begin text.

4. Aide memoire

The British Government has stated that it will not consent to a further advance of gold to Czechoslovakia by the Tripartite Gold Commission until it has satisfactorily resolved outstanding claims issues with the Czechoslovak Government. In view of this position by the British Government, final action on, and implementation of, the prospective U.S.-Czechoslovak claims agreement appears to depend, critically, on the successful conclusion of British-Czechoslovak claims negotiations.

Although the U.S. Government is pleased by the reports it has had that progress was made during British-Czechoslovak talks in Prague September 3–4, the U.S. Government has had no indication from either participant in those talks of when an agreement, even in principle, might be expected. The U.S. Government fully appreciates the difficulty of providing such an indication as well as the difficulty of rapidly resolving the complex issues involved in a claims negotiation. The U.S. Government has no desire to involve itself in any way in the British-Czechoslovak negotiations, nor would it wish, without serious cause, to add to the pressure either participant in those talks may feel to reach a rapid conclusion.

Nevertheless, the U.S. Government would be gravely remiss in not bringing to the attention of both governments certain important considerations. Specifically, there are mounting pressures in the U.S. Congress to reach a final resolution of the claims issue this year. Most interested parties in the United States would be favorably disposed toward the prospective U.S.-Czechoslovak claims agreement—if that agreement were submitted for congressional action promptly during this session of the Congress. At present, the House of Representatives is scheduled to adjourn this session on October 23. Fearing that the administration may not be in a position to submit the agreement during this session, those parties determined to resolve the claims issue this year have under active consideration various alternatives to the negotiated claims settlement. These alternatives include passage of legislation still pending in the Congress, legislation to which all governments with an interest in this matter have expressed their strong opposition. Indeed, despite an administration request that it not do so, the Senate took further, important action on one such piece of legislation September 14.

Lest the claims agreement painstakingly negotiated by the United States and Czechoslovakia be lost, the administration believes it must submit the agreement to the Congress on or about October 1. The U.S. Government trusts that by then it may receive sufficient assurances from the British and the Czechoslovak Governments to permit it to proceed.

The U.S. Government again strongly urges the British Government and the Czechoslovak Government to reach without delay some settlement of outstanding differences which will permit the British Government to consent to the further advance of gold to Czechoslovakia by the Tripartite Gold Commission. Such a settlement is vital if the U.S.-Czechoslovak claims issue is to be finally resolved in a manner consistent with the clear interests of each of our governments.

In view of the aforementioned circumstances, the U.S. Government would appreciate receiving at an early date any assurances, comments, or proposals that the British Government or the Czechoslovak Government may care to render.

End text.

5. Ridgway-Johanes discussion. After covering the points in the aide memoire, and informing Johanes of the SFC action of September 14 over our express opposition, she said that the administration has essentially two options: either not to send to the Congress the U.S.-Czechoslovak agreement, or to send the agreement to the Congress. If we do not send it up, we face the near certainty that the Moynihan bill or something close to it would be passed in this session. If we do send the agreement up, we will likely need to do so without firm British assurance of their readiness to consent to the delivery of the gold. In the latter case, the Senate would likely amend the Moynihan bill to provide for approval of the $81.5 million settlement, subject to U.S. receipt of the $81.5 million by a date certain, e.g., December 31, 1981, failing which the Moynihan bill would enter into force automatically.
She stated that we feel we have little alternative but to send the agreement up on or about October 1. She noted, however, that in view of gloomy report on UK-GOC negotiations she had received from Prague (Prague 3771)³ she did not feel optimistic about the prospects for a favorable outcome. She acknowledged likelihood of slippage in House’s projected October 23 adjournment date, but re-emphasized Congress’ growing determination to resolve the issue in this session.

6. Johanes’ initial inquiry was on status of Bingham bill⁴ in the House. Ridgway responded that for the moment interested parties in the House seemed more preoccupied with questions about how to distribute $81.5 million equitably. Specifically, they were focused on the problem of the so-called “Benes group” of claimants. She noted the apparent readiness of backers of the Moynihan bill, if necessary and after the Senate had passed the bill, to attach the bill to a piece of important legislation already passed by the House to ensure House approval. While no action has been taken by the full HFAC on the Bingham bill, Ridgway indicated it was simply a matter of time until interested parties in the House considered their options in the light of limited time remaining in this session.

7. Ridgway stated that the condition in the conditional approval-Moynihan bill option was not complete execution of the U.S.-GOC agreement as now drafted, specifically annexes A and B, but simply receipt by the U.S. of $81.5 million by a date certain. She commented that U.S. had seen no evidence of GOC readiness to consummate claims settlement for delivery of gold held in U.S., adding, however, that the administration itself would have difficulty considering such an option in view of its consistent position on the TGC gold. The possibility of obtaining a delay in congressional consideration of the agreement until the next session, however dubious on its face, was seriously undercut by our inability to give the Congress any commitment that even then we would be in a better position to proceed.

8. Johanes began by stating that situation had been created by UK’s abandonment of the 1964 agreed minute procedures and that UK position in the current negotiations amounted to “blackmail tactics”. Clearly, he said, UK was seeking a “ransom” for the gold. This was evident in UK’s insistence on receiving a “global figure”, its desire to avoid an examination of such specifics as the “Munich loan”. (Johanes stated British counter request in September 3–4 session had been 39 million pounds.) Johanes said GOC would “not like what happened in the Senate” September 14 or see it as other than “a step to increase the pressure” on GOC. He characterized situation as “really very bad”.

9. Ridgway interjected that despite current gloom, U.S. hoped that few outstanding technical issues in U.S.-Czechoslovak agreement would be quickly resolved and that we might move to an initialing of the agreement as soon thereafter as possible.

10. Johanes, without suggesting whether GOC would be prepared to initial an agreement under the circumstances, noted that our governments had initialed two previous agreements. The responsibility for failure this time would be on “the shoulders of the U.S.”, perhaps more accurately on the Congress, but on the U.S. Government nonetheless, Johanes said. “We will let the international community know what has happened to our gold, taken from us by the Nazis.” U.S. “might call it propaganda”, but “we will tell our story”, and “we will do it very well.” In noting he would send aide memoire to Prague, he said he had no idea what kind of “assurances, comments, or proposals” GOC might make, but he was sure the SFC move would be seen very negatively. He cautioned that the GOC response to enactment of the Moynihan bill would be “very strong”.

11. Ridgway assured Johanes that we would be delivering the same message to the British, and that we thought it best to continue to share with all parties our candid views as to where we are headed.

12. Ridgway-Fretwell discussion. Ridgway’s introductory remarks were similar to those with Johanes, including outline of options confronting U.S. and U.S. conclusion re need to send agreement to Congress by or about October 1. Fretwell opened by noting that UK had proposed a continuation of UK-GOC negotiations in London next week, implying that UK awaited GOC response on this timing.

13. Emphasizing pessimistic current prospects for U.S.-Czechoslovak agreement, and likelihood of conditional approval, Ridgway pointed out that if U.S.-Czechoslovak agreement were lost, any UK-GOC agreement, or possibility for an agreement likely would be lost as well.

14. Fretwell, “thinking out loud”, inquired why the Congress could not wait until e.g., “February-March 1982”. Ridgway said we could not give the Congress any assurances that would then be in a better position than we are now; a volatile gold market could greatly alter Czechoslovak or U.S. attitudes toward level of settlement acceptable; there was general feeling that in the Congress that it was being had, that there simply would never be the long-sought global settlement. She concluded by restating assumption that UK would not wish to proceed toward an eventual agreement with GOC only at that time to look back and realize that it had been effectively doomed with the loss of the U.S.-Czechoslovak agreement. The time for such a realization was now.

Haig

1. Source: Reagan Library, William L. Stearman Files, Subject File, Czechoslovakia (1 of 2). Confidential; Immediate. Sent Priority for information to Paris and Brussels; sent for information to Zurich and Bern.
2. See footnote 2, Document 403.
3. Telegram 3771 from Prague, September 15, reported on the Czechoslovak-United Kingdom claims negotiations. (Department of State, Central Foreign Policy File, D810433–0227)
4. See footnote 2, Document 403.