740.00119 E.W./10–1644: Telegram
The Ambassador in the Soviet Union (Harriman) to the Secretary of State
[Received October 17—6:25 a.m.]
3951. No preliminary discussions relating to the Hungarian armistice terms were held over the week-end. The matters treated in the Department’s 2437 and 2438, October 14, midnight, have, therefore, not yet been discussed here and we will, of course, be guided by those messages in the discussions which will presumably take place today or tomorrow.
I doubt that there are any ulterior economic motives for the reparations policies of the Soviet Government. Destruction in the enemy-occupied portions of the Soviet Union was extremely severe and the Soviet Government is determined to get everything it can out of Germany and her satellites rapidly to make good at least a portion of these losses.
I believe that the Russians wish eventually to see economic stability in central Europe and I would not wish to suggest that they would deliberately pursue a policy of economic disruption in those countries. But for the moment their main preoccupations there are military and political rather than economic.
And they are aware that if a certain amount of economic distress should result unavoidably from the policies they see themselves obliged to pursue this would not be wholly to their own disadvantage. It would result in a reduction of the industrial and military potential [Page 911] of the countries in question. It would reduce the standard of living to something nearer the Russian level thereby obviating invidious comparison and satisfying a deep-seated demand on the Russian side that defeated enemies should not live better than the Soviet peoples. It would undermine the economic position and thereby the influence of the wealthier and more conservative classes. Finally the Russians are aware that the governments in those areas in the immediate post-hostilities period are not apt to be composed entirely or even predominantly of elements whom they regard as entirely reliable. Economic difficulties would have a tendency to discredit these regimes and to put people in a frame of mind to accept the authority of any groups which could hold out hope of restoration of order and stabilization of economic life, if even at a lower level than before.
Naturally groups able to bespeak the favor and support of Moscow are in the best position to hold out such hope. In this way a certain amount of economic distress would have tendency to contribute to the establishment in power of groups entirely friendly to the Soviet Union.
All these factors might well operate to temper the desire of the Soviet Government at this time for economic stability in the central European area and to reconcile it to the necessity of a certain degree of disruption of economic life in the period immediately following the termination of hostilities.
Repeated to London as 217 and to Rome as 4.