Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

860F.50/12–1648: Telegram

The Chargé in Czechoslovakia (Penfield) to the Secretary of State

secret

Praha, December 16, 1948—11 a. m.

1861. Czech difficulties (see Embtel 1855, December 15¹) and worsening general economic situation (including internal food and consumer goods shortages) attributed by Communist press and propaganda organs to politically motivated western imperialism with special emphasis on ECA. US export license policy is particular target Official Czech figures show October volume US–Czechoslovakia trade at lowest postwar figure.

While our economic policy re Czechoslovakia appears to be effectively severe, our public statements concerning east-west trade, such as made by Assistant Secretary Thorp at Paris,² may create in minds of more intelligent satellite leaders (see remarks Nyarady reported Bern telegram 1622 to Department³) impression of possible liberalization American policy re trade with Soviet satellites.

Question therefore arises whether some shift of emphasis in propaganda treatment of our economic policies vis-à-vis satellites might not be constructive. If it were made clearer by US that in face of politically motivated economic policies of Czech Government, US policy could hardly be more liberal than it is, Embassy feels we would strengthen our position locally because:

(1) Majority of politically literate Czech population already sees picture in those terms and many feel we are either hypocritical, if they realize actual severity our policy, or foolish, if they take some of our public statements at face value, and (2) intelligent Czech leaders who, while perhaps loyal Communists, are alarmed at tempo and intended completeness Czechoslovak domination by USSR, would be strengthened and perhaps even enabled to effect some tactical concessions, for instance in connection with global settlement. Czech individuals have approached Embassy officials expressing similar sentiments Nyrady.

Czechoslovak-Soviet Moscow agreement announced yesterday may provide convenient opportunity for initiation propaganda shift. In separate telegram⁴ Embassy will outline propaganda lines illustrating table suggestion.

Pouched Moscow, Warsaw, Budapest, Belgrade, Sofia and Bucharest.

Penfield

1. Not printed; it reported that the high-level Soviet-Czechoslovak economic, negotiations in Moscow during December 1948 may have resulted in a $200 million gold grant to Czechoslovakia in order to bolster Czechoslovakia’s dwindling dollar supply and to allow it to serve as an import intermediary for the USSR (660F.6131/12–1548).
2. The reference here is presumably to the speech on United States trade policies made on November 10, 1948, to the Economic Committee of the Third Session of the United Nations General Assembly meeting in Paris, by Assistant Secretary of State Willard Thorp. For a summary of the speech, see Department of State Bulletin, November 14, 1948, p. 616.
3. Not printed; it reported on statements made to Bern Legation officials by Nicholas Nyáradi, who had just resigned as Hungarian Minister of Finance and gone into exile. Nyáradi expressed the opinion that the theory that the West should increase trade with the Soviet satellites in eastern Europe as a means of building up friendly feeling there was based on a false assumption. Nyáradi insisted that the increase in police power and Soviet direction in eastern Europe would prevent trade from having any practical political effect (864.00/12–748).
4. Telegram 1897, December 24, from Praha, not printed (860F.50/12–2448).