740.00119 E.W./1–645: Telegram
The Secretary of State to the Ambassador in the Soviet Union (Harriman)
37. 1. With regard to your request for final instructions on the reparation Article (reurtel 28, January 4) Department is in agreement with the views you express on reducing Soviet demands and the question of pricing. It seems further apparent that there is little [Page 964] likelihood of securing Soviet agreement to the other principles which the Department believes should guide the reparations section of the Allied Control Commission (reDeptel 2584, November 2). Although Department believes that there are counter arguments to those advanced in the Soviet aide-mémoire, some of which you have indicated in your telegram 5078 [5079], December 31, it seems clear that no amount of argumentation would compel the Soviet Government to recede materially from its views.
2. The Department is in agreement with your remarks in the third [second] paragraph of your telegram 5078 [5079], December 31, with regard to Soviet contention that only countries receiving reparations should be involved in the way reparations are collected. The Department believes that we should insist on our participation in a subcommittee of the Control Commission on reparations. You may inform the Soviet Government that unless their agreement is obtained on this point this Government will sign the Armistice Terms only with a written reservation to the effect that the United States reserves the right to reopen with the Soviet and British Governments the question of the execution of the reparations Article if in the light of later circumstances it is found that American economic interests are being unwarrantably prejudiced. This reservation will be communicated by letter to the Governments of the Soviet Union and the United Kingdom at the time of signature of the Armistice Terms.
3. Department is not clear as to the meaning of your statement at conclusion of third [second] paragraph of your telegram 5078 [5079] “even though neither of us are demanding reparations from Hungary”. It is true that neither we nor the British are demanding reparations in the same sense or to the extent as the USSR, Czechoslovakia, and Yugoslavia. It was our intention, however, in our proposed phrasing of the former Article XIII (reDeptel 2585, November 2) to establish the obligation of Hungary to compensate us as well as any other Allied state for losses or damage to property resulting from Hungarian military operations. In our opinion, this was taken care of by the phrasing of the first sentence of our draft of Article XIII and it was for this reason we omitted from our draft the sentence reading “Compensation will be paid by Hungary for losses caused to the property of other Allied states and their nationals in Hungary or in territories occupied by it during the war, the amount of compensation to be fixed at a later date.” Department notes that sentence quoted has been omitted from Article XII of latest Soviet draft (Your telegram 40, January 4). Department instructs you to endeavor to secure reinsertion of sentence quoted above if the Soviet intention is that Article XII should limit compensation to USSR, Yugoslavia, and Czechoslovakia and exclude other Allied states. [Page 965] You may inform the Soviet Government that unless their agreement is obtained on this point this Government will sign the Armistice Terms only with a written reservation to the effect that the United States Government reserves the right to demand compensation from Hungary for losses to the property of the United States or its nationals in Hungary or in territory occupied by Hungary and recognizes that other United Nations have the same right. This reservation will be communicated by letter to the Governments of the Soviet Union, the United Kingdom and to the Hungarian Delegation at the time of signature of the Armistice Terms.
4. The Department authorizes you to accept the reparations Article if agreement can be secured on the points covered in paragraphs 2 and 3 above. Otherwise you are to accept only with written reservations along the lines indicated. It should be made clear to the Soviet Government that we may find it necessary to publish either or both of these reservations if it is necessary to make them.