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

44. Memorandum of Conversation¹

SecDel/MC/50

New York, October 6, 1966, 10 a.m.

SECRETARY’S DELEGATION TO THE TWENTY-FIRST SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY

New York, September–October 1966

SUBJECT

• Bilateral Issues (Part I of III)²

PARTICIPANTS

• U.S.
  • The Secretary
  • Mr. Jonathan Dean—IO/UNP
• Czechoslovakia
  • H.E. Vaclav David, Foreign Minister of Czechoslovakia
  • H.E. Karel Duda, Ambassador of Czechoslovakia to the U.S.
  • H.E. Milan Klusak, Permanent Representative of Czechoslovakia to the UN
  • Mr. Miroslav Soukup (Interpreter)

1. Minister David said he greatly welcomed this annual opportunity to discuss questions of mutual interest. He wanted to raise a number of bilateral questions, then discuss Viet-Nam and the German problem.

2. Minister David said there had been a moderate increase in Czech-American trade. This had been helped by visits on both sides; another American business group was expected in Prague soon. But Czechoslovakia was limited in its capacity to work toward further increase of trade since it had no representation in New York, the center of most commercial dealings. The Embassy’s commercial section was located in Washington, out of the commercial mainstream of the country. Minister David asked whether it would not be possible to station in New York a few of the personnel of the commercial section of the Czechoslovakian Embassy in Washington as a subsection of the Embassy, not a separate, independent commercial representatives office. The Secretary took note of the fact that the establishment of a commercial representatives office had been included in the draft of the financial agreement between the two countries. He said in the given context he did not find the Czechoslovak request extraordinary, but that he would look into the matter further after his return to Washington.

3. Minister David said there had been a marked increase in scientific and cultural exchange between the two countries, which was definitely a positive trend in their relations. Czechoslovak films had received high critical recognition and a number of awards. The Czechoslovak government was considering a number of exhibits in the U.S.; among these were an exhibit of medieval Jewish religious art, drawings of children who had been in the Theresienstadt concentration camp and works of Czechoslovak modern artists. The Minister said this favorable development could be much greater if some old outstanding issues were resolved. One was the financial and property claims agreement, which had been initialed by the U.S. side but not concluded. The second was granting of Most Favored Nation treatment to Czechoslovakia. Solution of these problems would result in a great increase in trade and contacts. Without solution, there would be limits to progress in these fields.

4. The Secretary replied that since he and the Minister had last seen each other, the President had proposed to the Congress East-West trade legislation which would permit granting MFN treatment to individual countries. According to our constitution, this legislation must originate in our House of Representatives. The Secretary said, for the Minister’s private use only and not for public circulation, he had been told by Congressional leaders that they were not prepared to take up the trade legislation before the pending Congressional elections but would be prepared to do so after the elections. This was a political factor beyond the control of the executive branch in the American system. We expected Congressional hearings on the bill to begin in January or February. Meanwhile, we were trying quietly to build up support for the legislation among various public groups including business and trade union circles; visits of American businessmen to Czechoslovakia like that mentioned by the Minister could be helpful in this sense.

5. The Secretary said the financial and property claims agreement was to some extent linked with the MFN legislation. The previous draft agreement, which had been a working-level paper subject to Departmental approval, had, in addition to earlier payments from Czech properties here, provided for settlement through payment by Czechoslovakia of $2 million against total property claims; $20 million in gold would also be returned to Czechoslovakia. The amount to be paid by Czechoslovakia in this settlement was out of line with the American property claims, and the settlement as such was out of line with other similar settlements in Eastern Europe. The draft had encountered very severe opposition in Congress. If signed, it would have become an obstacle to conclusion of East-West trade legislation because the American claimants would have made their objections effectively felt in Congress. Consequently, as a minimum step, we must delay action on the agreement with Czechoslovakia. As a new chapter in Czechoslovakia-American relations developed, we would hope to find some way to proceed with the question without causing a political incident, which would be a set-back to our relations.

6. Minister David said that the negotiations had been a long time in the process. Each step by both sides had been carefully considered, the negotiators on both sides had been sincere. He said that the Czechoslovak side had all along had its own critics, who kept claiming that the Czech Foreign Ministry was not pushing hard enough and its claims were too low. As regarded the gold, it belonged to Czechoslovakia and had been stolen by Hitler. This fact was undisputed and the other members of the Tripartite Commission controlling disposal of the gold had expressed their agreement to its return to Czechoslovakia. The moral issue here was clear: the gold belonged to the Czechs, had been stolen by the Nazis, and should be returned to Czechoslovakia. Minister David said he was hesitant to make observations on the domestic political proc-ess of the U.S., but wasn’t it possible that progress toward these agreements with Czechoslovakia before the elections might not actually have a favorable effect on the American electorate.

7. The Secretary said he would not debate the gold question. Our problems were procedural and political in character; we hoped in time to find a better solution. He said that American political leaders, who had to be the best judges of such matters, told him that sympathy or a favorable attitude does not have the same impact on the electorate and on election results as does opposition. More generally, it was true that the overall atmosphere in the United States had improved with regard to East-West relations. President Johnson had taken the initiative on this question on a number of occasions. The formulation of some of his statements may not have pleased the governments of Eastern Europe, but they had definitely helped to move public opinion.

1. Source: Department of State, Conference Files: Lot 67 D 586, CF 85. Confidential. Drafted by Dean and approved in S on October 17. The meeting was held at USUN.
2. Memoranda of the other portions of the Rusk-David conversation concerning Vietnam and Germany are ibid.