Foreign Relations of the United States, 1955–1957, Eastern Europe, Volume XXV

233. Memorandum From the Deputy Assistant Secretary of State for Economic Affairs (Kalijarvi) to the Acting Secretary of State¹

Washington, February 15, 1957.

SUBJECT

• Need for an Expanded Relief Aid Program for the Hungarian People

Problem:

In light of (a) the prospective needs of the Hungarian people for large quantities of wheat and feed grains, and for other relief goods and (b) the U.S. policy of opposing the Kadar regime, what should be the U.S. policy as regards the furnishing of relief assistance on an accelerated and expanded scale to Hungary?

Discussion:

The Hungarian people are continuing to resist the regime imposed on them by the Soviet forces. That resistance is taking the form of strikes and other actions resulting in the disruption of production and a shortage of goods. The regime is attempting to consolidate its hold over the people and compel them to accept its domination. It is our policy not to provide assistance which will strengthen the Kadar regime.

From a political viewpoint, it is important that the United States carry out an expanded relief program to the Hungarian people. It is certain that the Soviets will endeavor to exploit any economic aid to Hungary from the West for the purpose of entrenching a regime submissive to its control, and for this reason we are opposed to furnishing economic aid directly to the Hungarian Government. However, if assistance in some form is not forthcoming from the West the USSR will undoubtedly furnish enough assistance to keep the economy going and exploit the abandonment by the West as a means of exerting greater pressure on the population for cooperation with the existing regime. Expanded relief assistance from the U.S. distributed directly to the Hungarian people, whether or not the situation is entirely desperate or supplies could be obtained from the USSR, would prove that the Hungarian people have not been abandoned by us. This would hold true even if the Soviets or the Hungarian regime prevented the implementation of the program.

Relief supplies are currently being provided to Hungary through the International Committee of the Red Cross, under its agreement with the Hungarian Red Cross. Supplies being furnished at present levels, however, will not meet the needs of the Hungarian people in the interim before the next harvest. A period of real hardship is in prospect for the Hungarian people. It is proposed that the present U.S. relief program be expanded to take care of the pending relief needs, provided the United States aid would help the Hungarian people as distinct from the regime and could be furnished on terms satisfactory to the United States. (Tab D² sets forth in detail the experience under the current relief program and its present status in relation to the developing situation.)

The provision of supplies by the United States in a manner consistent with the need, on the one hand, and the U.S. policy of non-support of the Kadar regime, on the other, will raise problems in connection with operations within Hungary and may also involve making arrangements with European governments to supply needed commodities on a reimbursable basis in advance of shipments from the United States. It is thought that a procedure through the ICRC and/or the UN might offer a solution which would permit direct distribution to needy people with a minimum of interference by the Hungarian government.

As an example of the kind of problem facing the Hungarian people there may be noted a prospective wheat deficit of about 200,000 tons. Cost of covering the entire gap in the form of flour from U.S. sources would be $33 million (at CCC cost). It is not proposed to cover this entire amount but rather to see if it is feasible, given policy and operational considerations, to supply about one-fourth of the prospective deficiency at this time. Other items will be furnished as needed to obtain a balanced relief program. A sizeable increase in the present relief program would require expansion of the facilities of ICRC. The feasibility of administering an expanded program would need to be discussed with other government agencies, the ICRC and the UN. It is contemplated that the operation of the program would be carefully phased to insure conformance to U.S. objectives at each step.

At the present time representatives of the ICRC are in Washington discussing with us their program for an expanded relief effort in Hungary which includes a proposal to channel relief supplies on a commercial basis through the distribution facilities maintained by the Hungarian government.³ The sales proceeds of relief supplies would be used by the Hungarian Red Cross, acting under the supervision of the ICRC, to furnish relief assistance in the form of local currency to needy Hungarians, to pay the administrative expenses of the ICRC and HRC and for the repair of hospitals. The ICRC believes the Hungarian Red Cross currently is practically independent of the Kadar regime and is likely to remain so if the HRC can financially support its relief activities without recourse to the regime. While the latter situation may be subject to some doubt, the HRC is a channel which is identified with the Hungarian people. This program of commercial distribution of relief supplies would be supplemented by free relief aid distributions directly to needy Hungarians.

The ICRC representatives appear to attach great importance to an expanded Hungarian relief program utilizing commercial distribution facilities on the grounds that the magnitude of the probable requirements could only be met effectively by such distribution facilities and this method would have the additional advantage of generating local currency for the purpose of furnishing relief aid on a broader, more flexible and diversified basis to needy Hungarians. For example, with relief funds the needy Hungarians could buy clothing, blankets, soap and toilet articles on the local market. The ICRC representatives have also raised the question of their operating and administrative expenses incurred in bringing relief supplies to the Hungarian frontier. As a neutral international relief agency, the ICRC appears to be unconcerned with our political problem of trying to minimize the effects of relief aid on strengthening the Kadar regime. There is a possibility, moreover, that if we do not achieve a satisfactory accommodation with the ICRC, that agency which serves as our principal access for furnishing relief to the Hungarian people will reduce its relief efforts in Hungary and will justify such action as being necessary because the United States was unwilling to adopt the most feasible method of furnishing relief on a mass basis to the Hungarian people.

The issues are whether (a) the United States should undertake an expanded relief effort for the Hungarian people and (b) such relief effort can be executed by the ICRC on terms acceptable to the United States. On the latter question, we believe the ICRC is anxious to undertake an expanded relief program and, to that end, will agree to a negotiated arrangement for the distribution of relief supplies. We have in mind a negotiated arrangement along the following lines: (a) The United States would be prepared to participate in an expanded relief program for Hungary, involving the provision of increased amounts of foodstuffs and of limited quantities of feed grains for farm animals, (b) foodstuffs and feed grains of U.S. origin would be distributed directly and gratis to the Hungarian people, (c) if the ICRC is insistent on using commercial distribution channels, the United States would agree not to discourage other friendly governments from furnishing relief supplies for distribution in limited amounts through commercial facilities provided the local currency proceeds were used to finance the distribution costs and administrative expenses of the ICRC and the HRC for relief activities in Hungary, and the balance of such funds promptly distributed on a nondiscriminatory basis, under the supervision of the ICRC, to needy Hungarians and (d) if the ICRC demonstrates a need for operating funds over and above those obtainable from other sources, including the private voluntary agencies, we would be prepared to pay a share of such costs out of the Section 401 funds made available for an expanded Hungarian relief program.

The substance of the foregoing memorandum was coordinated at the staff level with ICA. Mr. FitzGerald, Deputy Director for Operations of ICA, sent me a memorandum under date of February 6⁴ stating that while ICA concurred in principle with the desirability of expanding Western relief activities in Hungary, ICA had some reservation about seeking authorization at this time because of the problems of internal distribution in Hungary (Tab E). These problems are now upon us and it would be helpful if we could obtain guidance to negotiate suitable arrangements with the ICRC.

Basic policy questions and recommendations:⁵

A decision to expand the program of relief assistance to Hungary raises a number of related policy questions discussed in more detail in the attachments and enumerated below:

1. Should the United States be prepared to furnish assistance on an accelerated and expanded scale to the Hungarian people to meet a part of prospective resource deficiencies and on a properly safeguarded basis which would relieve hardship among the people but not alleviate to any appreciable degree the economic problems of the Kadar regime?

Recommendation:

That the United States be prepared to furnish such assistance to the Hungarian people.

2. If expanded assistance is approved, on what basis would it be furnished, in what amount and for what duration?

Recommendation:

That the United States be prepared to furnish as necessary, relief assistance to the Hungarian people in an additional amount up to $20 million in surplus foods (under Title II, PL 480) and, for non-surplus relief supplies such as medicines, and to cover other costs (including a share of ICRC operating expenses if necessary), $5 million from Mutual Security Act funds available under Section 401 in order to meet the immediate needs of the Hungarian people in accordance with the principles and objectives set forth in this memorandum. This assistance would be in addition to and would be integrated with the relief program now being implemented. To the maximum practicable extent relief supplies would be furnished free and directly to the Hungarian people to cover their relief needs until the new crop is harvested in August.

It is contemplated on the basis of the present information that about 40,000 tons of flour estimated at $10 million in terms of CCC cost and about $10 million of other surplus agricultural products (rice, dried milk and feed grains) would be furnished as necessary. The $5 million of Section 401 funds would be used for non-surplus relief supplies such as medicines and to defray the costs of inland transportation in Europe, handling, distribution and other costs related to the furnishing of $20 million of surplus agricultural products.

It may be necessary to make additional allocations of authority and funds in the light of the developing situation. It is recommended that you be prepared to consider recommendations for such allocations. Expenditures will be kept under continuous review. (Tabs A and D).

3. Should the United States as part of its efforts to furnish expanded relief assistance to the Hungarian people take steps where necessary to arrange with other European governments to provide food on a reimbursable basis pending arrival of shipments of like foodstuffs from the U.S.?

Recommendation:

It is recommended that you approve approaches to other European governments, e.g., Germany, Austria, Italy, to obtain their agreement to advance food on a reimbursable basis for U.S. use in assisting the people in Hungary under an expanded relief program.

4. Should United States relief assistance be channelled through the United Nations, if practical arrangements consistent with our policy objective can be made with the United Nations?

Recommendation:

That you approve the principle that the UN be associated with U.S. relief assistance to a degree mutually agreeable to the U.S. and the UN, provided such assistance is limited primarily to a relief program over which appropriate United States influence would be exerted. (Tabs B and D).

5. (a) Should the U.S. encourage other friendly countries to furnish relief assistance to the Hungarian people within a political framework not inconsistent with that adopted by us and (b) should the U.S. acquiesce in friendly countries furnishing exports on a loan or other credit basis directly to the Kadar regime?

Recommendation:

That you approve the principle that the U.S. (a) will encourage other friendly countries to furnish relief assistance and, within that context, indicate to them that the US would not object to some of their relief supplies being channelled through commercial distribution channels, provided the local currency proceeds were used to pay as needed some of the administrative and operating expenses of the ICRC and HRC and the balance of such funds were promptly distributed on a non-discriminatory basis, under the supervision of the ICRC, to needy Hungarians, and (b) will discourage other friendly countries from extending loans and credits to the Kadar regime on the grounds that such actions would undermine the resistance of the Hungarian people to the regime. (Tab C).

6. Should the Department undertake to initiate courses of action by the other interested government agencies and private organizations which will result in the execution of an expanded relief program for the Hungarian people, consistent with our policy of minimizing any indirect benefits to the Kadar regime?

Recommendation:

That you approve action by the Department to enter into necessary arrangements to obtain execution of an expanded relief assistance program at the earliest practicable date to the Hungarian people. Such a program, however, should be embarked upon and utilized primarily to strengthen the Hungarian people in their resistance against the Soviet dominated regime.

7. In light of (a) the ICRC estimate that the capability for direct food relief activities in Hungary probably could not be increased to reach more than 1 million people (about 200,000 families) mostly in Budapest and (b) its proposal that relief supplies be channelled increasingly on a commercial basis through normal distribution facilities with the sales proceeds to be used primarily for relief activities, what should be the guidelines for our negotiations with the ICRC?

Recommendations:

(a) Encourage the ICRC to increase its direct relief distribution facilities on the understanding that the United States would furnish appropriate quantities of flour and other surplus agricultural products exclusively for that purpose;

(b) If the ICRC can demonstrate a need for funds to cover its operating expenses, chiefly outside of Hungary, and such expenses cannot be obtained effectively from other sources, the United States would be prepared to pay a portion of such unfunded expenses out of the $5 million of Section 401 funds requested in 2, above.

(c) Encourage the ICRC to persuade the Hungarian Red Cross to utilize more effectively the churches and similar non-communist groups to register needy individuals and to serve as a distribution channel, and to cooperate closely with other relief agencies, such as CARE (acting under the supervision of the ICRC) to speed up direct relief distribution facilities in Hungary.

1. Source: Department of State, Central Files, 864.49/3–857. Confidential. Attached to a memorandum from Dillon to Acting Secretary Hoover dated March 8. Drafted by Bray and A.J. Macone (ITR/IRD) and Colbert (EE); concurred in by EUR, U/MSA, L/E, G, S/P, and IO.
2. Tabs A–E are not printed. They deal with proposals for expanding relief assistance and the amount and timing of same, the role of the United Nations in such an effort, and the need for an understanding with friendly governments on how to respond to Hungarian economic needs.
3. These discussions have since terminated. [Footnote in the source text.]
4. FitzGerald wrote that “Until and unless relieved, distribution facilities now available in Hungary would seriously impede significant expansion of relief activities.” (Department of State, Central Files, 864.49/2–657)
5. Herter initialed his approval of all the recommendations on March 11.