Foreign Relations of the United States, 1969–1976, Volume XXIX, Eastern Europe; Eastern Mediterranean, 1969–1972

129. Memorandum From Helmut Sonnenfeldt of the National Security Council Staff to the Presidentʼs Assistant for National Security Affairs (Kissinger)¹

Washington, October 13, 1972.

SUBJECT

• US-Hungarian Claims Settlement

Acting Secretary Irwin has sent the President a memorandum reporting that a claims settlement agreement between the United States and Hungary was initialed in Washington October 12.² It was negotiated here last week.

Our claims against Hungary (for war damage to the property of US nationals, nationalization of US-owned private and corporate property, and for loss of a US aircraft over Hungary in 1951) came to about $65 million. The Hungarians have agreed to pay about $19 million in settlement, to waive their own claims against the United States, and to settle outstanding bonded indebtedness with the American holders of the defaulted Hungarian bonds. The Hungarians also let it be known beforehand that they hope to get MFN treatment but, contrary to the State Departmentʼs expectations, their negotiators did not link it directly with their agreement to a claims settlement.

Mr. Irwin considers this settlement “satisfactory” and a major step forward in our relations with Hungary.

The State Department is particularly interested in calling the Presidentʼs attention to the agreement because it results from discussions which Secretary Rogers held in Budapest last July.³ State has also arranged for the story to get prominent press play as a “surprise” agreement. (See todayʼs Washington Post.) CIEP was kept abreast of the negotiations as were we, but no formal clearance was sought. The State Department is now anxious to press ahead in the economic field with the other eastern European countries. (A memorandum from the Secretary on Czechoslovakia has already arrived and is being staffed separately.)⁴ As far as I can see this is being done on an ad hoc basis when what we need is a carefully considered action plan tailored to both our economic and our political objectives with the separate East European countries. I will be making recommendations to you on this in the next few days.⁵ Meanwhile, I suggest that you forward Mr. Irwinʼs memorandum to the President for his information by signing the memorandum to him at Tab A.⁶

Recommendation

That you sign the memorandum at Tab A, which forwards the Acting Secretaryʼs report on the Hungarian claims settlement.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 693, Country Files—Europe, Hungary, Vol. I. Limited Official Use. Sent for urgent action. Hormats initialed the memorandum indicating his concurrence.
2. The October 6 memorandum from Irwin to the President is attached but not printed.
3. See Document 128.
4. See Document 92.
5. See Document 24.
6. An October 14 memorandum from Kissinger to the President, signed by Haig, transmitted Irwinʼs memorandum and summarized Sonnenfeldtʼs arguments. It concluded: “The State Department evidently wishes to press ahead to settle outstanding economic issues with other East European countries. I believe that we need to plan the pace and scope of this, weighing both our political and our economic interests in the individual countries. Peter Flanigan and I are directing the agencies to prepare a proposed plan as a basis for our policy decisions in this field.” A notation on the memorandum indicates the President saw it. (National Archives, Nixon Presidential Materials, NSC Files, Box 693, Country Files—Europe, Hungary, Vol. I)