Foreign Relations of the United States, 1961–1963, Volume XVI, Eastern Europe; Cyprus; Greece; Turkey

12. Telegram From the Embassy in Czechoslovakia to the Department of State⁰

Prague, March 31, 1962, 4 p.m.

400. Czech response March 29 (Embassy telegram 396)¹ to our March 12 presentation confirms view (Embassy telegram 336, February 14)² that it will be impossible reach agreement with Czechs unless we make concession on trade, at least to position outlined Department telegram 364.³ Also confirms my opinion that second minimum Czech requirement is claims article which follows principles of settlement using language “nationalized or affected by other Czech measures”.

Geneva conversations (which connected economic agreement with Berlin, Cuban issues) indicate that US not prepared finally conclude agreement even on our own previously proffered terms. (Department will recall that on instruction (Department telegram 349)⁴ Embassy had few days prior Geneva talks expressed readiness conclude agreement immediately.) Our present negotiating position thus understandably weaker, for Czechs now have no impelling grounds adjust their position for sake of gold or other benefits they would receive if agreement were to enter into effect near future.

Nevertheless I would suggest one further effort be made move negotiations forward but only if Department prepared make concessions outlined above. I make this recommendation because (1) we cannot be certain that Czechs unwilling initial agreement without signing unless we do try; (2) if we make one further effort meet their position and negotiations break, onus will be more on them than at present and we will have sacrificed nothing of substance; (3) we may thus be able salvage agreed portions of agreement as starting point future negotiations; (4) increasing UK pressure applied not only in TGC but at high Foreign Ministry level may in time force us to release Czech gold independently outside of agreement, whereupon we would lose our leverage to achieve settlement.

Suggest therefore I be authorized approach Czechs, advance as our final position: (1) Text of letter exchange on trade contained Department telegram 364; (2) text claims article incorporating language conforming principles settlement (March 15 draft).

Under altered negotiating circumstances I cannot be overly hopeful this position will result in Czech agreement to text but for reasons stated believe it worth try. In event Department unable approve final position stated preceding paragraph or Czechs refuse accept it if advanced, believe suspension negotiations only course.⁵

Wailes

0. Source: Department of State, Central Files, 611.494/3–3162. Confidential.
1. Not printed. (Ibid., 611.494/3–2962)
2. Not printed. (Ibid., 611.494/2–1462)
3. Dated March 10. (Ibid.)
4. Telegram 349, March 23, outlined final U.S. requirements for conclusion of a trade agreement. (Ibid., 611.494/3–2362)
5. In telegram 387 to Prague, April 14, the Department of State instructed the Embassy to seek an exchange of letters as a substitute for a trade article in the body of a U.S.-Czech agreement, but insisted on maintaining the U.S. position on claims. (Ibid., 611.494/4–1462)