Foreign Relations of the United States, 1964–1968, Volume XVII, Eastern Europe

42. Memorandum of Conversation¹

Washington, November 12, 1965, 10:30 a.m.

SUBJECT

• Call on the Secretary by the Czechoslovak Ambassador, Dr. Karel Duda

PARTICIPANTS

• United States
  • The Secretary
  • Irving I. Schiffman, EUR/EE
• Czechoslovakia
  • Ambassador, Dr. Karel Duda

Ambassador Duda called on the Secretary at his own request to inquire regarding the current status of 1) the financial and claims settlement and 2) the question of travel restrictions on Czechoslovak diplomats. The Secretary had promised Minister David to look into these two bilateral problems,² Dr. Duda said, and he wished to learn the results of the review. Ambassador Duda said that he did not think he needed to restate the Czechoslovak position on these two questions.

The Secretary replied that he was familiar with the Czechoslovak views on these subjects. With regard to the travel restrictions, the Secretary said that it is a complicated matter, requiring a review with other Departments of the Government, and that at this time he could say nothing new on the subject.

Insofar as the claims settlement is concerned, the Secretary said that we have had a sharp critical reaction to the proposed draft agreement from claimants and some Congressmen. He said that the reaction was based in part on the very large discrepancy between the settlements we have concluded with other East European countries and the proposed settlement with Czechoslovakia. The Secretary then cited the following percentages we have obtained in the claims settlements with other countries: Yugoslavia (1948)—91%, Yugoslavia (1964)—60% (estimated), Romania (1960)—40%, Bulgaria (1963)—75%, Poland (1960)—50%, (estimated), Czechoslovakia (1964) proposed—16% (approx.). The Secretary went on to say that major resistance to the settlement with Czechoslovakia resulted from its being way out of line with other agreements and that we could not move ahead on the present basis. To force the issue on the basis of the present draft agreement in the face of strong opposition would create an impediment to our broader policy objectives and to our intentions in the area of East-West trade. The Secretary suggested that “my colleagues in the Department could review the subject” with the Ambassador to see what were the possibilities in this matter. The Secretary added, after we have had access to the appropriate Congressional Committees and ascertained their thinking, we would be in a better position to act.

Ambassador Duda said that he would report the Secretary’s remarks to Minister David, but that at this time he wished to make two points:

1. Negotiations for the agreement had extended over a period of about ten years and there were few people around who were directly involved. He was one of those few. In the course of the long negotiations, when the lump sum claims settlement for nationalized property was under discussion, the amount was never presented as a problem by the American side and there was no indication of dissatisfaction with the settlement, the basic provisions of which were agreed upon in 1958. We acted in good faith, Dr. Duda said, that we were in agreement with the American Government on the terms of the settlement and that the American Ambassador in Prague had full powers to negotiate.

The Secretary interjected that the agreement was a tentative draft, which Dr. Duda acknowledged.

2. The second point Dr. Duda wished to make was related to the gold question as a part of the agreement. Under the prevailing circumstances, Ambassador Duda said, we agreed to make the gold question part of the package, although it was not strictly a bilateral matter. He added that the Nazi-looted gold was to be returned to Czechoslovakia under the Paris agreement. Although Czechoslovakia has been able to live without the gold for twenty years and could do so for another twenty years, they regard the blocking of the recovery of the gold by the United States as a very sensitive political question, transcending its economic importance, because of the close connection of the gold problem with the Munich agreement and the German question.

The Secretary replied that he was familiar with the Czechoslovak position in this regard, that he did not wish to enter into a legal discussion of the matter, but that there were obligations of varying kinds on both sides which have a bearing on each other. The Secretary added that the stakes in our relations are greater in the field of bilateral trade, which should be developed on a positive basis and in the broader context of East-West trade relations. The Secretary said that we would like to see the question of the financial and claims settlement out of the way and suggested that Ambassador Duda may wish to discuss the matter further with Mr. Leddy, to which the Ambassador agreed.

The meeting took place in a cordial atmosphere.

1. Source: Department of State, Central Files, POL 17 CZECH–US. Confidential. Drafted by Schiffman and approved in S on November 29. The meeting was held in Rusk’s office.
2. Rusk and David met on October 6 during the U.N. General Assembly session. Memoranda of their conversation are ibid., Conference Files: Lot 66 D 347, CF 2548.