Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Council/3–648

The Secretary of State to the Soviet Ambassador (Panyushkin)

Washington, March 25, 1948.

Excellency: I have the honor to acknowledge the receipt of your note, No. 50, of March 6, 1948,¹ concerning the discussions which the Governments of the United States, the United Kingdom and France held in London respecting Germany.

In its note of March 6, the Soviet Government reiterated the views expressed in the Soviet Embassy’s communication of February 13, 1948,² to the effect that the London discussions were in contradiction to the Potsdam Agreement and to the Agreement on Control Machinery for Germany. In its memorandum of February 21, 1948,³ the Department of State pointed out that these talks were arranged for a discussion of problems in Germany of mutual interest to the three governments, and that there is no provision in the Potsdam Agreement, or other agreements relating to Germany concluded by the four occupying powers, which prevents any of the powers from discussing between themselves questions of common concern.

The United States Government notes that the Soviet Government continues to fail to recognize that the three powers have been obliged to consult among themselves at this time as a result of the unwillingness of the Soviet Government to implement the principles of economic unity as well as other principles of the Potsdam Agreement. The Soviet Government claims that the other occupying powers have undertaken a series of unilateral actions, contrary to the four-power agreement with respect to Germany.

The Soviet Government cites, as the first expression of such policy, the agreement between Great Britain and the United States with respect to the economic fusion of their respective zones of occupation in Germany. The note of the Soviet Government states: “It is well known that the question of creating a unified Anglo-American Zone was not even submitted for the consideration of the Control Council”. This statement does not correspond to the facts. At the meeting of the Allied Control Council in Berlin on July 20, 1946, General McNarney made the following statement on behalf of his Government:

“The United States Government is of the view that no zone in Germany is self-sustaining. The treatment of two or more zones as an economic unit would improve conditions in the zones concerned.

“Therefore, the United States Government has authorized its representative on the Allied Control Council to join with the representatives of any other occupying power or powers in measures for the treatment of our respective zones as an economic unit, pending quadripartite agreement which would permit the application of the Potsdam decision to treat all of Germany as an economic unit so as to attain a balanced economy throughout Germany.

“While the United States would prefer quadripartite agreement to implement the Potsdam decision for the establishment of central German administrative agencies for Germany as a whole, its representative is prepared to cooperate with the representatives of any or all of the other occupying powers in Germany in establishing administrative arrangements to secure economic unity.

“The United States does not intend by its present proposal to divide Germany but rather to expedite its treatment as an economic unit.

“Any arrangements which representatives of the United States may make with the representatives of any other occupying power will be open on equal terms to the representatives of all other occupying powers at any time they are prepared to participate.

“The United States Government proposes this arrangement because of its belief that Germany can no longer be administered in four airtight compartments without free economic interchange unless economic paralysis is to result. The United States Government is unwilling to permit creeping economic paralysis to grow if it is possible to attain economic unity between its zone and any other zone in Germany as a prelude to economic unity for all Germany.”

According to the official minutes of the Allied Control Council (CONL/M (46) 19), the meeting agreed in view of the unpreparedness of the other delegations to defer consideration of the United States proposal.⁴ At the next meeting on July 30, 1946, according to the official minutes (CONL/M(46)20), the Control Council considered the United States Government’s proposal. At this meeting Marshal Douglas announced that after full consideration the British Government had authorized him to accept, in principle, General McNarney’s offer. Comments on the United States proposal were made by the Soviet representative at this meeting and by the French representative at subsequent meetings.⁵

It should be recalled that the same offer of the United States Government to join its zone economically with that of any other occupying power had previously been made before the Council of Foreign Ministers by the Secretary of State, Mr. Byrnes, on July 11, 1946,⁶ at Paris, and was subsequently reiterated by him in an address at Stuttgart on September 6, 1946.⁷ The responsibility for rejection of this offer and for failure to include its zone in this economic arrangement lies upon the Soviet Union itself.

The threat to the authority of the Allied Control Council does not arise from the actions of the United States, but rather from the consistent pursuit by the Soviet Government in the eastern zone of Germany of a systematic unilateral policy of its own. The Soviet Government has failed to observe the principle of economic unity provided for in Section III, B, 14, of the Potsdam Agreement. It has likewise failed to insure, as provided in Section III, B, 15(c), of the same agreement, “the equitable distribution of essential commodities between the several zones so as to produce a balanced economy throughout Germany and reduce the need for imports”. It has carried out reparation removals of industrial capital equipment from the eastern zone without regard to agreed limitations on such removals and without consideration of the legitimate peace-time requirements of the German economy. It has also continuously taken reparation in the form of resources and current production, contrary to the understanding at Potsdam. The Soviet Government under the guise of reparation has taken into its possession in gigantic trusts (the so-called Soviet A.G.’s) major industrial establishments in the eastern zone accounting for 25 to 30 per cent of the total remaining industrial productive capacity.

The Soviet Government has furthermore carried out in its zone a unilateral policy with respect to political activity. The Potsdam Agreement envisaged that local self-government would be re-established throughout Germany on democratic principles; that all political parties with rights of assembly and of public discussion should be allowed and encouraged; and that representative and elective principles should be introduced in the various levels of government. In actual practice, however, the Socialist Party was suppressed by the imposed amalgamation with the Communist Party into the Socialist Unity Party, which has become the new bulwark for a totalitarian regime in eastern Germany, while the other authorized political parties have been subjected to pressure, discrimination and intimidation, and have not been enabled to function freely. Basic human rights are being denied the population, while concentration camps are being used anew for individuals unwilling to accept this new totalitarianism. It is the unilateral policy of the Soviet Union which has cut off eastern Germany from its natural intercourse, political and economic, with western Germany.

The Soviet Government not only charges the other three governments with the inadequate functioning of the Allied Control Council but also with the failure of the Council of Foreign Ministers to reach agreement on German questions during its 1947 sessions held in Moscow and London. The official records of these conferences do not confirm the Soviet Government’s assertion that it made efforts to bring about four-power agreement by meeting half-way the proposals of the other powers. The Soviet Government resorts to a curious logic when it seeks to demonstrate its assertion by enumerating proposals of the Soviet Union not found acceptable by the other three powers. By a sincere effort to arrive at reasonable compromises, the Governments of the United States, the United Kingdom and France were able to arrive at many agreed positions, only to find that the Soviet Government was not likewise ready to seek solutions acceptable to all four powers.

It is impossible not to draw the inference from the known proceedings of the Allied Control Council and the Council of Foreign Ministers that the Soviet Government has been pursuing in Germany objectives different from those of the other occupying powers, who are seeking the pacification of Germany and the economic recovery of Europe as a whole, including Germany. This inference appears to be borne out by the extensive remarks in the Soviet Government’s note of March 6 directed against American aid in the economic recovery of Europe as well as against the economic and political cooperation of the United Kingdom, France, Belgium, Holland and Luxembourg confirmed in the treaty signed at Brussels, March 17. It is not these steps which have led to the political cleavage of Europe as claimed by the Soviet Government, but rather prior actions of the Soviet Government and a group of eastern European states under Soviet influence which have disrupted the normal framework of the European community and interfered with the progress of recovery from the effects of the war.

In the light of the foregoing, the United States Government is not able to agree with the Soviet Government’s interpretation of the London discussions on the German question. The London discussions sought the solution of the urgent political and economic problems which have arisen as a result of the continuous failure to reach and implement quadripartite agreement, due to the attitude of the Soviet Government. As was stated in the communiqué issued on March 6 by the representatives of the powers participating in the informal London discussions: “The participating powers had in view the necessity of ensuring the economic reconstruction of western Europe including Germany, and of establishing a basis for the participation of a democratic Germany in the community of free peoples. While delay in reaching these objectives can no longer be accepted, ultimate Four Power agreement is in no way precluded”.⁸

Accept [etc.]

For the Secretary of State:

Norman Armour

1. Ante, p. 345.
2. Ante, p. 338.
3. Ante, p. 340.
4. For a summary report of the 34th Meeting of the Allied Control Council, July 20, 1946, see telegram 1767, July 20, 1946, from Berlin, Foreign Relations, 1946, vol. v, p. 580.
5. For a lengthy report of the 35th Meeting of the Allied Control Council, July 30, 1946, see telegram 1825, July 30, 1946, from Berlin, ibid., p. 585.
6. The reference here is to a statement made by then Secretary of State James F. Byrnes at a meeting of the Council of Foreign Ministers in Paris; see Foreign Relations, 1946, vol. ii, pp. 880, 897.
7. For text, see Department of State Bulletin, September 15, 1946. p. 496.
8. For the full text of the communiqué quoted here, see p. 141.