740.00119 FEAC (Info)/4–947: Telegram
The Acting Secretary of State to the Political Adviser in Japan (Atcheson)
125. FEC 14. Advance Transfers of Reparations. At meeting FEC Apr 3 General McCoy in prepared statement69 announced that US Government would issue paper on Advance Transfers of Japanese Reparations as interim directive to SCAP70 as FEC has been unable to reach agreement on subject. As justification for issuance McCoy referred to urgent need of war-devastated countries for equipment for reconstruction, to deterioration of unused equipment in Japan, and to fact that failure to get reparations program started is impeding progress of SCAP’s occupation objectives. Step which had been anticipated by most members aroused little rancor. Representatives reiterated their countries’ position as conveyed to you in previous telegrams. UK representative presented his country’s views which had just arrived. These were in brief that UK share should apply also to [Page 384] Hong Kong and Borneo; that some extension should be made to cover Australian New Guinea, Papua and Nauru; that allotment of five percent is too small to cover relief needs in all British East Asiatic dependencies; and that Japanese external assets in possession of recipient countries should have been taken into account, in which case China’s share of 15 percent might have been reduced to ten percent pending consideration of information on external assets in China. USSR representative in restating case asserted that US action in issuing interim directive is premature and undesirable and will have negative effect upon international cooperation; that all possibilities in FEC had not been exhausted; and that because Soviets had not been invaded by Japanese does not mean that Soviets do not need reparations.
Reparations Allocations Procedures. This paper of which SCAP has been informed will be issued with Advance Transfers as interim directive.71 Paper was placed before FEC only about 2 weeks ago and representatives have not had time to ascertain opinions of governments. However, acting in personal capacity representatives made various amendments which were acceptable to US Government and have been incorporated in paper. Paragraph requiring reparations receiving countries to obligate themselves not to sell or barter reparations except under certain conditions encountered considerable opposition in FEC and has been deleted because (1) SCAP could not enforce this provision, and (2) this condition must be agreed to by governments concerned and cannot be imposed by unilateral action of US Government.
Supply of Food for Civilian Relief in Japan. UK representative has served notice that he will reopen subject in FEC by introducing new paper designed as compromise between former FEC and US papers.