Foreign Relations of the United States, 1946, Council of Foreign Ministers, Volume II

C.F.M. Files: Lot M–88: Box 2063: US Delegation Minutes

United States Delegation Record, Council of Foreign Ministers, Second Session, Twenty-Seventh Meeting, Palais du Luxembourg, Paris, June 26, 1946, 4 p.m.²⁵

Paris, June 26, 1946, 4 p.m.

secret

Records of Decisions of the 15th, 17th, 18th, and 19th Meetings

The Ministers approved the records of decisions of these meetings.

Restricted Meeting

The Ministers, on M. Molotov’s suggestion, agreed to hold a restricted meeting this evening at 9:45 p.m. to discuss the outstanding political questions on the peace treaty with Italy (C.F.M.(46)140).²⁶

Agenda for Future Meetings

M. Molotov suggested that the Ministers confine themselves today to a discussion of the Bulgarian treaty. He pointed out that the Ministers had held twelve meetings which were devoted to the Italian treaty and had made considerable progress. The Rumanian, Bulgarian, Hungarian, and Finnish treaties had not yet been discussed and it was time to see where the different Delegations stood with respect to these treaties. He suggested that the Ministers instruct the Deputies to complete the Finnish treaty within the next two days with an object of submitting it to the Council of Foreign Ministers for consideration.

Mr. Byrnes stated that he did not object to M. Molotov’s proposal that the Deputies be requested to prepare the Finnish treaty. It was his understanding that the Ministers had agreed last week to endeavor to complete the Italian, Rumanian, Bulgarian, Hungarian, and Finnish treaties by Friday. He suggested that the Ministers follow the Potsdam order in discussing these treaties. He did not wish to change this order and discuss the last treaty first. He was willing to consider the Rumanian treaty today and then the Bulgarian, Hungarian, and Finnish treaties in that order.

M. Molotov stated that his proposal did not go against the Potsdam order. He had suggested that the Deputies be instructed to finish their work on the Finnish treaty within the next day or two in order to expedite the preparation of this treaty. He had no objection to placing the Rumanian treaty on today’s agenda.

Mr. Bevin stated that certain of the articles in the Finnish treaty were awaiting decisions of the Economic Committee, since it was desirable to have common economic clauses in all the treaties. He saw no reason why the Deputies should not draw up the Finnish treaty—there was very little misunderstanding on it. It seemed to him that Mr. Molotov was proposing that the last should be first, as stated in the Bible.

M. Molotov stated that he agreed that the Bible was a good thing, but in the present case the Conference could do without it. He continued that all the economic articles need not be uniform in all the treaties. He thought that it would be advisable for the Deputies to examine the question as to which economic clauses in the various treaties should be identical.

Mr. Bevin suggested that the Ministers proceed to an examination of their suggested agenda, as contained in C.F.M. (46) 152,²⁷ and that they instruct the Deputies to prepare the Finnish treaty as soon as possible.

The Ministers agreed upon this procedure.

Peace Treaty With Rumania

The Danube (Article 35)

Mr. Bevin stated that it was the policy and desire of the U.K. Delegation to place in all the treaties with Austria, Rumania, Bulgaria, and Hungary an article relative to the Danube. He had consulted the U.K. Delegation and the British Government on the Soviet proposal to make a declaration on the Danube (C.F.M. (46) 135),²⁸ and he was now ready to drop his original proposal if the declaration in question were accepted on the lines of the U.K. draft circulated yesterday (C.F.M.(46) 148).²⁹ He believed that the U.K. draft declaration combined the views of the U.S. Delegation, for it made the Four Powers responsible that the Danube, in the interests of world peace and world commerce, should be open on terms of complete equality to the nationals and vessels of all states. The U.K. proposal recognized that difficulties might exist during the period of occupation and had therefore stated that as long as Allied forces protecting the line of communication to Austria were stationed on the Danube, all navigational arrangements must be operated in accordance with instructions as may be issued by the commanding officers of such forces. The U.K. had thus endeavored to combine the U.S. and U.S.S.R. views with the views of the British Delegation. The U.K. had met the Soviet desire not to write in the treaty an article on the Danube but to make a declaration. He inquired whether there were any objections to the U.K. proposal.

Mr. Byrnes stated that he was satisfied with it.

M. Molotov stated that the Soviet Delegation had just received the draft, and that it had not had sufficient time to examine it. It was his view that no one desired to include in the Rumanian treaty an article on the Danube. Thus the question was one of the text of a declaration. Although the Soviet Delegation had not had sufficient time to study the U.K. draft, he must state that at first glance he had some doubts regarding it. It called for fuller consideration. M. Molotov continued that it would be difficult to make a declaration concerning the Danube without the participation of the riparian countries. In order to obtain a quick settlement of this matter, would it not be possible to adopt the Soviet draft as a basis and to instruct the Deputies to work out something on this draft?

Mr. Bevin stated that the U.K. Delegation was originally in favor of inserting in the Rumanian peace treaty an article on the Danube. To compromise and in order to facilitate the regularization of this question, it had tried to draw up a draft that was really affirmative, rather than to accept the pious expression contained in the Soviet draft. He explained that the U.K. draft clearly indicated the intention of the Four Powers that the great Danubian waterway should really be free to the traffic and trade of the world powers. It was his understanding that the Ministers really intended trade in this area to be free for all. None was going to seek a privileged position against the other. Therefore, if that principle were accepted, it was only a question of finding acceptable words for the declaration. If the U.K. were willing to surrender its original position, i.e., not to insist upon an article on the Danube to be included in the treaty, was it too much to ask that the U.K. draft be taken as the working document? If this draft could be accepted as a basis, Mr. Bevin was willing to refer the matter back to the Deputies. It seemed to him that it would be a fair compromise if the U.K. withdrew its original proposal, and the Soviet Delegation accepted the British draft. Mr. Bevin explained that he had had great difficulty in persuading the U.K. Govermnent to agree to this procedure, but it had done so in the hope of facilitating the work of the Conference.

Mr. Byrnes explained that the U.S. original position was that there should be an article in the treaty on the Danube. But he had explained his willingness to agree to a declaration along the lines proposed by the U.K. Delegation. He did this with the understanding that if this declaration were not agreed upon, then the United States Delegation would insist than an article on the Danube be included in the Rumanian treaty. This declaration was not a part of the treaty, and the treaty had priority. It was possible that the Delegations would never agree upon the text of the declaration. If this was so, he wanted it made clear that the treaty would have to contain an article along the lines of the original United States proposal.

M. Molotov stated that the Soviet Delegation could not consider it fair to examine the Danubian question without the participation of the Danubian states. He said that if the other Ministers did not agree that his compromise proposal (the Soviet draft declaration) should be sent to the Deputies, he suggested that the question be kept on their agenda and that the Ministers revert to it at a later date.

The Ministers agreed to postpone discussion of this matter and to pass on to the other items of the agenda.

Restitution (Replacement, Part II, paragraph 2 of Appendix I)³⁰

M. Molotov stated that the Soviet Delegation urged that its proposal as contained in paragraph 2 of Part II of Appendix I (Restitution) be accepted by the Ministers. This clause was acceptable to the Soviet Union and to Rumania. It did not affect the interests of any other country. For these reasons he could not understand why there should be any objections to it.

Mr. Byrnes stated that he agreed that other nations were not party to the transfer of property referred to in this proposal, but they were parties to the peace treaty, and they would assume responsibility for the fulfilment of the treaty clauses. The United States was opposed to the replacement principle, but it recognized that the Soviet Union had already drawn up an agreement on this matter with Rumania and it realized that an exception might be made.

M. Molotov stated that the Soviet proposal read:

“Restitution of property may be replaced by a payment of compensation or a delivery of other property on the basis provided by any agreements already concluded or any agreements which may be concluded in the future between the Government of the United Nation concerned and the Rumanian Government.”

Mr. Byrnes stated that that proposal requested the United States and the other United Nations hereafter to underwrite agreements made and also those that might be made in the future. He said that the principle of replacement and compensation therefor was in effect a reparation principle and not a restitution principle which concerned identifiable objects. The U.S. Delegation recognized the fact that agreements had been made. He was disposed to accept this article; however, the U.S. must be informed of the terms of the agreements. It must know what it was underwriting. The U.S. proposal, as contained in Section (c) of Paragraph 2 of Part II described the agreement entered into by the U.S.S.R. and Rumania in September–1945. Mr. Byrnes explained that the Rumanian treaty would be presented to the Senate. He would have a very difficult time explaining this clause if he were unable to explain what was in the agreement in question or what might be included in future agreements. Information should be furnished in regard to these treaties. Would it not be advisable to annex the Soviet-Rumanian agreement to the treaty?

M. Molotov stated that he wished to ease Mr. Byrnes’ situation before the Senate. A similar formula had been accepted by the Council of Foreign Ministers in connection with the Italian treaty. He referred to United Nations property in Italy (C.F.M. (D) (46) 133, Part I, paragraph 2),³¹ and he suggested that this paragraph be incorporated into the Rumanian article on restitution. The clause would read, “The Rumanian Government and the government of a country entitled to restitution may conclude agreements in lieu of the provisions of this Article”. He explained that such a clause made no mention of property or referred to existing agreements. It was similar to the article already adopted in the Italian treaty. He believed that it would be advisable to leave the settlement of such economic questions to the parties concerned, in Italy as well as in Rumania. This would narrow the area of misunderstanding and eliminate complaints to the effect that the peace treaties were too onerous.

Mr. Bevin stated that it seemed to him that such a clause would cut across the first part of the restitution clause. The Soviet Government had by agreement obtained reparations, and there would be none left for any other country unless liabilities were written in the treaty.

M. Molotov stated that there must be some misunderstanding. He could not understand how such an interpretation could possibly be placed on his proposal. He had merely proposed that agreements could be concluded, and his proposal was based on the idea of such mutual agreements. He again referred to the agreed-upon provision in the Italian treaty.

Mr. Byrnes stated that he was willing to agree to M. Molotov’s proposal in principle; however, he would like to see it in writing.

Mr. Bevin stated that the paragraph under discussion in the Italian treaty did not relate to restitution of identifiable property. He suggested that the Soviet proposal be referred to the Economic Committee.

Mr. Byrnes stated that according to his understanding, the first paragraph of the article would read:

“The obligation to make restitution applies to all identifiable property at present in Rumania which was removed by force by any of the Axis Powers from the territory of any of the United Nations”.

That paragraph would be followed by the paragraph in the Italian treaty suggested by M. Molotov. This paragraph referred to identifiable property and would permit the countries to make agreements regarding the return of such property or for the delivery of property substituted for the identifiable property.

M. Molotov stated that he wished to point out that the Soviet and Rumanian Governments had already reached agreement on this subject. This agreement did not affect the interests of any other country. The first part of the article concerning restitution of identifiable property followed the lines of the United Nations Declaration of January 5, 1943 which dealt not only with identifiable property but also gold, et cetera.

Mr. Bevin stated that two formulas had been presented. It was difficult for him to follow them without having them before him in written form. He suggested that the Deputies agree to a formula based on the two proposals advanced.

Mr. Byrnes stated that he had no objection to this suggestion. He said that he could find no reference in the Declaration of January 5, 1943 to gold or any of the matters raised by Mr. Molotov. He thought it would be better to let the Deputies study this matter.

M. Molotov called attention to the fact that paragraph 2 of Part I of Annex III of the Italian treaty referred to property in general and not to identifiable property. However, if Messrs. Byrnes and Bevin wished this question to be studied by the Deputies, he had no objection.

Mr. Bevin stated that paragraph 2 of Part I in the Italian treaty did not deal with the same subject as they were discussing in connection with the Rumanian treaty. The Italian clause dealt with property in general. The Rumanian clause referred to property taken away, that is, looted property.

M. Molotov said that he did not wish to infer that the two articles dealt with one and the same thing. There was a similarity, however.

Mr. Byrnes again suggested that it would be advisable to refer this question to the Deputies.

Mr. Bevin stated that the real trouble was that the U.K. and U.S. were being asked to underwrite an agreement. They did not wish to do this, and for this reason the Ministers were looking for some kind of a substitute clause.

M. Molotov said that there was no real need for this article, as agreement had been reached between the Soviet and Rumanian Governments on this question. But for the sake of form, the Soviet Delegation believed that it should be in the treaty. It would be advisable for the other Governments concerned to reach agreements like the one concluded by the Soviet Union and Rumania. He wished to add that the U.S., U.K., and French Governments had been fully informed of the Rumanian-Soviet agreement.

Mr. Bevin suggested that the article in question might be dropped. He had heard of the Soviet-Rumanian agreement and of its effect, but he had never seen the actual text.

Mr. Byrnes stated that the U.S. Government had been informed of the agreement but had never been advised of its contents.

M. Molotov maintained that the agreement had been brought to the notice of both Governments.

Mr. Byrnes repeated that the United States had never received the actual text or even been advised of the exact date of conclusion. It only knew that such an agreement had been concluded. He thought that the inclusion of the article was unnecessary. There was no need of adding an article to the effect that the Rumanian Government and a United Nations Government could enter into agreements, for they could do that whether provision therefore was contained in the treaty.

Mr. Bevin inquired whether the Ministers could not agree to drop the article.

M. Molotov stated that he believed it would be advisable to keep the article in the treaty since a similar article was contained in the Armistice terms. He suggested that the matter be referred to the Deputies.

The Ministers agreed to refer Article 23 (Restitution)³² of the Rumanian treaty to the Deputies.

Article 24 (Restoration of United Nations Property)

Mr. Bevin suggested that the Economic Experts meet this evening at 10:00 p.m. to discuss this matter. Large issues were involved, and the Economic Committee had not as yet discussed them fully. The Economic Committee should be instructed to give a report on this matter at an early date.

The Ministers agreed to refer Article 24 (Restoration of United Nations Property)³³ to the Economic Committee.

Article 33 (General Economic Provisions)

Mr. Bevin stated that according to his understanding the real point at issue was the last paragraph of the Soviet proposal, referring to relations with neighboring countries. The rest of this article had been agreed to. He understood that a report was being drafted in which this one disputed point was underlined.³⁴

M. Molotov stated that that was precisely the reason why the Ministers should discuss it.

Mr. Bevin continued that the point at issue was that agreements made between neighboring countries should not contain the most-favored-nation principle.

M. Molotov stated that he wished to refer to the practice of the United States. The U.S. had concluded a number of treaties which contained exceptions to the most-favored-nation principle. Suffice it to mention United States treaties with Cuba, the Philippines, Panama, Canada, and similar treaties which were concluded by the U.S. before 1940. The Soviet Union had concluded a number of treaties before the war which contained exceptions to the most-favored-nation principle. Such reservations were contained in the treaties with Italy of 1924, Norway of 1924, Greece of 1924, and Belgium of 1935. All of these treaties contained reservations to most-favored-nation treatment in regard to Asiatic states. This was the practice of other governments. Sweden had made reservations in her treaties in regard to her neighbors. Turkey had done the same thing. The Soviet proposal had provided for a similar exception on the part of Rumania. This was no novelty. He concluded that he was not dealing with the question raised in paragraph (c) of paragraph 3 of Article 33 since this question was now being discussed in connection with the Italian treaty.

Mr. Bevin inquired whether M. Molotov’s wishes might not be met by adopting the agreed-upon provision of the Italian treaty.

M. Molotov stated that the Italian question was not being discussed in this connection. So far as he was aware, the discussions on the Italian treaty touched upon branches of Italian economy in which private enterprise did not participate. The question under discussion did not relate to this point.

Mr. Bevin suggested that the Ministers examine Part I, paragraph 5, of Annex II of the Italian treaty (General Economic Relations) which dealt with this question. This paragraph read:

“The foregoing undertakings by Italy shall be understood to be subject to the exceptions customarily included in commercial treaties concluded by Italy before the war and the provision with respect to reciprocity granted by each of the United Nations shall be understood to be subject to the exceptions customarily included in the commercial treaties concluded by that power.”

He said that the proposed Russian draft for the Rumanian treaty related to neighboring countries.

Mr. Bevin then explained that these exceptions applied to pre-war treaties with Belgium, Italy, and a number of countries. He believed that the limitative words in the Rumanian treaty appeared to be unnecessary if the aforementioned clause from the Italian treaty should be used. He expressed the hope that M. Molotov might agree to the wording of the Italian treaty.

M. Molotov stated that it was not necessarily so that an article suitable for the Italian treaty would be suitable for the Rumanian treaty or vice versa. No one had raised the question of relations with neighboring countries when the Italian treaty had been discussed. If this were considered an important question, some one would surely have raised it in connection with Italy.

Mr. Byrnes stated that the United States believed it to be a great mistake to apply a policy of preference to neighboring countries as had been done in the Soviet proposal. General agreement had been reached in regard to Rumanian commercial relations before the war. But now the principle of preferential treatment to neighbors was being discussed. He explained that the United States had no preference system with Canada or Mexico. It extended certain preferences to Cuba after that country had been liberated in order to help that country out of its economic and financial difficulties. The same policy had been adopted with respect to the Philippines. But no such treatment had been extended to Panama. He explained that the preferences granted to the Philippines and Cuba had not been granted in the interests of the United States, but in the interests of those countries when those countries had commenced their independent life. Provisions were later made to taper off these preferences as United States policy was to eliminate preferences throughout the world. He wished to say that the language of the Soviet text, after the elimination of the words “or which relate to relations with neighboring countries”, would take care of all pre-war agreements. Those were the only ones that should be taken care of.

M. Molotov stated that he wished to repeat that a number of countries had drawn up treaties containing exceptions to most-favored-nation treatment. Sweden had made such a reservation in its commercial treaty of 1924 with the Soviet Union. This reservation applied to Denmark and Norway. Norway had made a similar reservation in 1924 with regard to Denmark, Iceland, and Sweden. Turkey had done likewise in its treaty of 1927. Similiar reservations were contained in treaties concluded by the Soviet Union. The United States had made such reservations in favor of its neighbors in a number of treaties. Therefore in the case of Rumania the right should be reserved to that country that was often reserved by countries in their commercial relations with other countries. This would help Rumania get on its feet.

Mr. Bevin inquired as to what the Ministers wished to do. The United States had expressed a willingness to support the same clause for Rumania as had been included in the Italian treaty. Mr. Bevin associated himself with the United States Delegation. He maintained that if the Ministers carefully examined the text of the Italian clause, they would find that it covered all eventualities. It covered all the usual clauses in commercial treaties since it stated, “subject to the exceptions customarily included in the commercial treaties”.

M. Molotov believed that the Soviet proposal was more advisable in view of the economic situation of Rumania.

The Ministers agreed to postpone further consideration of this question.

25. For a list of persons present at this meeting, see the Record of Decisions, infra.
26. See footnote 13, p. 617.
27. C.F.M. (46) 152, June 26, 1946, Report by the Deputies, set forth the following suggested agenda for the Council: I. Balkan Treaties—Peace Treaty with Roumania (C.F.M. (D) (46) 182); 1. Danube (Art. 35); 2. Restitutions (Art. 23 and Appendix I, Part II, par. 1); 3. Restoration of United Nations property (Art. 24 and Par. 5 of Part III of Appendix II); 4. General economic Provisions (Art. 33, Soviet exception for neighboring countries); 5. Transport, Shipping and Civil Aviation (Art. 34); II. Peace Treaty with Italy—Outstanding questions. (C.F.M. Files: Lot M–88: Box 2063: CFM Records of Decision)
28. Ante, p. 613.
29. Supra.
30. For Appendix I, printed as C.F.M. (D) (46) 139, June 5, 1946, p. 474.
31. Ante, p. 463. The paragraph under reference was subsequently included as article 68, paragraph 7, of the Draft Peace Treaty with Italy referred to the Peace Conference; see vol. iv, p. 28.
32. In the Draft Peace Treaty with Rumania (C.F.M.(D) (46) 182, not printed), article 23 consisted of a reference to C.F.M.(D) (46) 139, June 5, 1946, p. 474.
33. In the Draft Peace Treaty with Rumania, article 24 consisted of a reference to C.F.M. (D) (46) 137, June 5, 1946, not printed.
34. Article 33 of C.F.M.(D) (46) 182 is not printed. This article, which set forth the text of the proposals of the United States, United Kingdom, and Soviet Delegations, did not take into account the resolution of many differences by the Committee of Economic Experts on a parallel article for the Italian draft treaty. For the Report of the Committee of Economic Experts on Italy on the provisions for general economic relations, see C.F.M.(D) (46) 167, June 12, 1946, p. 488. The disagreements among the powers regarding the provision on general economic relations in the Rumanian treaty are reflected in article 30 of the draft peace treaty with Rumania which was referred to the Peace Conference; see vol. iv, p. 76.