Foreign Relations of the United States, 1946, Paris Peace Conference: Proceedings, Volume III

CFM Files

United States Delegation Journal

September 23, 1946, 10 a.m.

USDel (PC) (Journal) 50

After a final statement by Mr. Walker (Australia), the Commission rejected by a hand vote of 10 to 3, with one abstention, the Australian amendment to Article 24, paragraph 8a, regarding Rumanians who had not become naturalized Australians until after the Armistice [C.P.(Gen)Doc.1.B.26]. The Commission then approved paragraph 8a (definition of United Nations’ nationals), Article 24 of the Rumanian treaty by a hand vote of 11 for, none against, and 4 abstentions.

The Commission then resumed discussion of Article 24, paragraph 4 (Compensation). Mr. Thorp (U.S.) spoke first on the amount of damage to UN property in Rumania and the relationship it bore to the total economic burden imposed on the country by the Armistice and the treaty. He said that the Soviet and some other Delegations had requested facts and figures bearing on the situation. He proceeded first to give an estimate of $70 million, based on figures formally presented by the Rumanian Delegation, as the total damage to UN property in Rumania. Of this, $10 million had been taken care of by credits, as the Rumanian Delegate had said, and since these credits were virtually extinguished by the inflation, there was left $60 million as a liberal estimate of the burden that would be imposed by paragraph 4. Mr. Thorp then proceeded to picture the total economic burden, after noting that the Rumanians had said they could give no figures and that no one knew the exact figures. Referring to the relevant articles of the Armistice, he estimated that the costs borne to date by the Rumanian Government had been $325 million for the maintenance of occupation forces, $100 million for reparation, $175 million for restitution, and $425 million for various burdens not appearing in the Government’s budget, such as requisitions. Including miscellaneous small items, there was an indicated total of $1050 million. The burden of obligation yet to be fulfilled Mr. Thorp estimated at $350 million (current dollars) for reparation, $350 million for restitution, $100 million for occupation forces and $150 million in German and Italian assets to be transferred to other ownership. Adding these future commitments to payments already made, the total Armistice and Treaty burden on the Rumanian economy was about $2 billion. It might be somewhat less (though it could hardly be much less) or it might be more. The point, Mr. Thorp said, was the contrast of this total figure with the $60 million compensation to be paid for damaged UN property. The compensation obligation would be approximately 3% of the total burden. He expressed amazement that the Rumanian Delegation had vigorously protested imposition of this $60 million, but had never mentioned the $2 billion total burden. Having established the point that the total burden must be looked at, Mr. Thorp said the U.S. Delegation proposed to file an amendment to paragraph 4, as it had for the Italian treaty, which would aim to reduce substantially the percentage of compensation to be paid.⁸ He noted that this would not significantly reduce the total burden, but asserted that the U.S. did not want to have even a small part of the responsibility of participating in the heavy overall burden which the Rumanian economy had to bear. Mr. Thorp went on to defend the provision for compensation to UN nationals with ownership interests in corporations which were not United Nations’ nationals by referring to Rumanian practices in connection with ethnic companies. Though it had been said the shares of these companies had risen in market value, the shares of the Rumanian subsidiary companies were not in fact quoted on the market. He also replied to the suggestion that the Rumanian Government should have some kind of control over the disposition of compensation proceeds accruing to UN nationals, for fear that UN owners would use such proceeds in a manner that would create overcapacity in some lines and thus unbalance the Rumanian economy. He said that one of the bases of the system of free enterprise was the assumption that owners of capital would invest it where it was most needed and would be most productive. He gave the development of the Rumanian oil industry as an example. He then explained the differences between the new U.S. amendment and the U.S. amendment to the Italian treaty, and closed his remarks by asserting that the facts showed that the responsibility for the economic burden on Rumania must be placed on other parts of the treaty and on provisions of the Armistice.⁹

Mr. Gregory (U.K.) said that in view of Mr. Thorp’s remarks he wished to table a paper stating the U.K. position.¹⁰ M. Alphand (France) expressed general agreement but wished to study the U.S. amendment. M. Gusev (USSR) said that some of the figures seemed fantastic and that he wished to study a transcript of Mr. Thorp’s statement. After it was decided that the verbatim transcript would be examined by the U.S. Delegation and submitted to the USSR Delegation, it was agreed to adjourn discussion.

The Commission then took up Article 26. The Ukrainian representative considered the article unnecessary and unjust, stressing Rumania’s participation in the latter stages of the war on the Allied side. He proposed that the entire article be replaced with a single sentence providing that Rumanian property rights and assets in the territory of the Allied and Associated Powers be restored. Mr. Gregory (U.K.) supported the article as it stood in the treaty draft. Mr. Walker (Australia) said he regarded the article as questionable and that clarification was needed as to whether the Allied and Associated Powers could use Rumanian assets only for commercial claims or if they could also be used as reparation for war claims. He added that Australia wished to submit an amendment providing some alleviation in connection with industrial and literary property rights.¹¹

8. For text, see C.P.(Plen) Doc. 29, Report of the Commission on the Draft Peace Treaty with Rumania, vol. iv, p. 434.
9. For text of Thorp’s remarks, see infra.
10. C.P. (B&F/EC) Doc. 30, the British paper, is not printed.
11. Australia did not submit an amendment at this point.