Foreign Relations of the United States, 1946, Council of Foreign Ministers, Volume II

C.F.M. Files: Lot M–88: Box 2063: US Delegation Minutes

United States Delegation Record, Council of Foreign Ministers, Second Session, Second Meeting, Paris, April 26, 1946, 4:30 p.m.²¹

Paris, April 26, 1946, 4:30 p.m.

secret

Peace Treaty With Italy

Mr. Bevin called on M. Couve de Murville, Deputy French member, to present the report of the Deputies (C.F.M. (46)4)²² regarding the peace treaty with Italy.

M. Couve de Murville reported that at their morning meeting the Deputies had agreed that the following subjects which were considered of special importance should be referred to the Council of Foreign Ministers for discussion:

• Preamble
• Italo-Yugoslav Frontier
• Trieste
• Dodecanese
• South Tyrol
• Franco-Italian frontier
• Italian Colonies
• Limitations to be imposed on the Italian Navy
• Disposal of surplus units
• Allied Inspectorate and Treaty Commission
• Reparations.

He added, however, that the Deputies had been unable to agree on a priority covering all, but suggested the following partial list, leaving the order of priority for the remaining questions still under discussion:

(a) Preamble

(b) Reparation

(c) The Italo-Yugoslav frontier, if the Committee’s Report²³ is ready in time.

(d) Trieste, if the Committee’s Report²⁴ is ready in time.

Mr. Bevin suggested that the Council proceed to discuss the items recommended by the Deputies and called for discussion on the first point, which was the Preamble of the Italian treaty.

Preamble (C.F.M. (D) (46)80)²⁵

M. Molotov asked whether there could be any doubt regarding Italy’s share of responsibility for the war and stated that it seemed to him that the phrase in brackets in paragraph 2 should be retained in the text.

Mr. Byrnes was of the opinion that there was no cause for difference, stating that it seemed to him that the phrases under discussion in both paragraph 2 and paragraph 4 (regarding the subsequent Italian contribution to the war effort) should be included.

M. Molotov considered that it would be possible to establish one more connection if the phrases in question in paragraphs 2 and 4 were linked and it was agreed to make similar amendments with regard to the Rumanian and Bulgarian peace treaties.

Mr. Byrnes expressed the view that the Preamble should stick to the facts in the case. Undoubtedly Italy must bear her part of responsibility, but the fourth paragraph was an equally accurate statement of what had subsequently happened and should also be retained. When it came to the Rumanian situation the statement should likewise be made to accord with the facts. If this principle were followed, there could surely be no objections.

M. Molotov pointed out that he had mentioned Bulgaria as well as Rumania.

Mr. Bevin stated that he could not accept motions on Bulgaria and Rumania until discussion of those treaties had been reached on the agenda.

M. Molotov stated that he was simply making a conditional proposal that when the Council dealt with Bulgaria and Rumania it should take under consideration the same facts.

Mr. Bevin retorted by saying that in his view the Council had decided to take up the Italian treaty and should limit itself thereto, and that it could not discuss conditions for Rumania and Bulgaria until it came to them. He added, however, that he meant no prejudice to a fair examination of the facts in every case.

M. Molotov stated that he proceeded upon the facts in the first place, and secondly was guided by the desire to be just. He wished that cognizance be taken of this position of the Soviet Delegation when discussion of the subject was reached. Under these conditions he had no objection to the inclusion of the phrases in question in paragraphs 2 and 4 of the Preamble.

M. Bidault expressed the view of the French Delegation that the question presented no difficulties. In the discussion of peace treaties it was most important that the Council take into consideration all the facts particularly with respect to the parts played by the satellites in their support of the Axis. As in all such cases, he pleaded for taking the problem as a whole and believed that if this line was followed, there should be no insuperable difficulties. The French Delegation a greed with what had been said before.

It was agreed to remove the brackets in paragraphs 2, 4 and 5.

M. Molotov reiterated his preceding reservation.

It was agreed to adopt the text of the Preamble as now constituted.

Reparations

M. Molotov submitted a draft of a Soviet proposal on reparations (C.F.M. (46)7)²⁶ which he read to the Council, and which contained a statement on Italian responsibility, fixed the sum of $300 million to be paid during the course of six years to the Soviet Union, Yugoslavia, Greece, and Albania, of which the Soviet Union’s share would be $100 million, and he enumerated resources from which these reparations would be drawn.

He went on to say a few words in clarification of the Soviet view, stating that the Soviet claim of 100 million dollars represented but a small portion of the damage caused on Soviet territory by the invasion of Italian troops. The Soviet proposal also provided for reparations for several other states but included only states actually invaded by Italian troops and who accordingly had a just claim to compensation and expectation of favorable results. He referred to the well-known facts concerning the destruction in Russia during the course of the war of many cities and villages, mentioning Minsk, the capital of Byelorussia, which had been invaded and destroyed by Italian as well as German troops, also Kharkov and cities along the Don; facts which the Italians could not deny. He recounted that in August 1942 the Eighth Italian Army, 250,000 men in strength, reached as far as the Don, rendering aid to Hitler in his plan to seize Stalingrad, and that Mussolini’s Italian armies in the Caucasus had in fact penetrated as far as 1200 to 1500 kilometers beyond the Soviet frontier. These facts could not be overlooked, and appropriate conclusions should be drawn. The Soviet Government was not guided by a desire for revenge, revenge being always a bad adviser in making policy, but was guided by a sense of justice and responsibility to its own people, who would not understand if Italy went unpunished. He hoped his colleagues and their Governments could accept the Soviet proposal.

Mr. Byrnes said the American position has been that Italy should pay reparations, but that the amount and form of reparations should be within the capacity of Italy to pay without the necessity for external assistance. The United States had since the Armistice extended over a half billion dollars in financial assistance to Italy, in the form of supplies for the Italian civilian population and advances of money. There was no immediate prospect of our receiving repayment, and it was doubtful whether we should ever get back anything on those debts. Meanwhile we were continuing to support Italy through the medium of UNRRA, and we saw little prospect that Italy could be put on a self-sustaining basis in the near future.

At Potsdam we had agreed to the principle that the payment of reparations by Germany should leave enough resources to enable the German people to subsist without external assistance.²⁷ We certainly did not want to apply a harsher principle to Italy than to Germany. We knew and regretted the suffering brought about by Italian participation in the early days of the war. We did not expect to receive anything in the form of reparations but did not think that we should suffer additional sacrifices so that reparations could be paid to other governments. We had proposed in September that the Allies should limit their reparations claims against Italy to factory and tool equipment designed for the manufacture of war implements which would not be required by the limited military establishment permitted Italy under the treaty and which would not be susceptible to conversion to civilian purposes, plus such claims as might be settled by the use of Italian assets within the territory of each Allied country. He added that we were prepared to have the Deputies study the question of Italy’s capacity to pay reparations under the same principle used in the case of Germany. With reference to the fixed sum of 300 million dollars called for by the Soviet proposal, it should be remembered that at Yalta a mistake had been made in using a fixed sum (20 billion) for reparations from Germany.²⁸ Later it had been found that because of the conditions under which modern war was conducted it would be quite impossible to achieve any such figure, and as a result it had been necessary to re-examine the question and determine how much Germany could actually pay. A fixed sum in this case would produce the same position. Italy today was seeking in the United States a loan of 25 million dollars for cotton to put some of its people to work, and at the same time was seeking another loan of 125 million dollars from the Export-Import Bank to start the wheels of commerce and industry. The facts here made it impossible to admit that a people seeking loans to enable them to achieve a standard of existence could pay the sum of 300 million dollars. The preamble spoke not only of Italy’s responsibility but of her assistance in the war as well, and we should take all of these matters into consideration and adopt the principle of leaving the people sufficient means to allow them to live without external aid.

If the Council could agree to this principle, the matter could be left to the Deputies to examine and submit a report in conformity with paragraph 3 of the Soviet proposal.

M. Bidault said that the principle of the responsibility of Italy to pay must be expressed in the treaty, and at the same time the principle that both Italy’s economic situation and her efforts during the latter part of the war to repay the damages caused should be taken into consideration. The French Delegation found less difficulty in paragraph 3 than in paragraph 2 of the Soviet proposal. The second paragraph contained two questions wherein there were differences of opinion, first, with respect to the amount of reparations, which he did not consider an insuperable difficulty; and, secondly, that France was not included in the list of countries to receive reparations. He recalled that France, the first country to be attacked by Italy, had, as President Roosevelt phrased it, been “stabbed in the back”. For this reason he could not accept any list of countries with a right to reparations which did not include France.

Mr. Bevin stated that the British Delegation took the same view as last September. The principle question was whether the problem was to be considered a political one or whether Italy’s capacity to pay should be taken into consideration. British experts had examined the question afresh and could not escape the conclusion that the Soviet proposal meant that British workers would have to support this additional burden. A study of the balance of payments indicated that it would be impossible for Italy to make a payment of this nature for a long time to come. He was quite ready, however, to accept the American proposal providing it was carried out with great care so as not to ruin Italian economy. Furthermore, the British Government considered that liability for relief payments should come before reparations. These payments had been a heavy burden accepted by the British people in a difficult period. He added that, as he had said in London last September, the British Government had no wish to condone what Italy had done, but it must take into account the extent to which she had succeeded in “working her passage home”. He believed that they would do much better for Europe, for Italy, and for themselves if they allowed Italy to restore her economy on a peacetime basis instead of stripping her territory and making it impossible for her to live. The policy toward Italy should be (1) to enable her to repay what had been supplied to her by way of relief, (2) to help her to restore her economy on a peace-time basis, and (3) to remove machinery and equipment which was not needed for her peacetime economy and which would help create a war potential.

M. Molotov stated that the considerations guiding Soviet insistence for reparations from Italy were two, and were stated in the first paragraph of the Soviet proposal; first, that Italy accept responsibility for the damage she had caused the Allies in the war, and, secondly, that, taking into consideration that Italy was the first to break with Germany, complete compensation in the form of reparations would not be requested. Referring to the economic assistance being rendered to Italy, he said it was true that Italy was short of raw materials, but she always would be. The Soviet Union had had to deal with several defeated countries, and to all she had rendered economic assistance without renouncing her reparation claims. It followed that the obligation to pay reparations did not conflict with economic assistance. The fact that defeated countries had to be given economic assistance did not relate to Italy alone. The Soviet Union had supplied cotton to Finland, Rumania, Bulgaria, and Hungary, but this was a matter pertaining to the sphere of commercial relations. The British worker would not be affected in any way by the Soviet proposal, which spoke of excess war plants. The proposal was that Italy should deliver portions of her war plants and make payments from gold that is being returned to her. He knew that Italy had 100 million dollars in gold as well as foreign credits and investments to the amount of 130 million dollars. It was a question of Italy’s paying from current production for a limited period and from the fortunes of war criminals and did not involve in any way American or British workers. As to the figures he had just cited, he said they were based on figures published in Federal Reserve Bulletin No. 1 of 1946 as well as monthly bulletins from the preceding year, and that the foreign assets figure had appeared in the Journal de Genève of February 27, 1946 and Federal Reserve Bulletin No. 1 of 1946.

Regarding the British attitude, he referred to the British Government’s agreement that Finland should pay reparations of 300 million dollars although her population was only one-twelfth of that of Italy, and asked why Italy should not be expected to pay at least the same amount. It was simply a question of a little more than one dollar per head of population per annum for Italy and would represent less than forty cents per head for the Soviet people. It was not possible to speak of Italian inability to pay this sum, which was the minimum if the principle of reparations were to be accepted.

He concluded by reiterating that the peoples of those countries invaded by Italy would be unable to understand the failure to accept this proposal. At the same time the Council should do its best to avoid harming, and even assist, Italian economy. This, he thought, would be possible.

Mr. Byrnes said his good friend Molotov was so convinced of his arguments that the figure of 300 million should be accepted that he (Mr. Byrnes) would not mind advancing these one-dollars to some of the Italians except for his fear that all Italians would end up by asking for them.

He asked his colleagues, without setting the fixed sum of 300 million dollars, to refer paragraph 3 of the Soviet proposal to the Deputies with the request that they examine the question and determine what the total sum from the different sources might amount to. He stated that in the proposal he submitted in September it was proposed that the Italian Government authorize each of the United Nations to take over and apply to their respective reparations claims such of the assets of the Italian Government (excluding diplomatic and consular premises) and of Italian nationals as are within the jurisdiction of the respective United Nations. With reference to paragraph 2 of the proposal which provides that Yugoslavia, Greece, and Albania would share with the Soviet Union the sum of 300 million dollars, he said he would like to know from the Deputies whether there were in Yugoslavia Italian assets which could be so utilized and what their value might be. Furthermore, he desired to know what gold had been referred to—whether it was the gold taken by the United States Army in northern Italy. If such were the case, it was his understanding that Italy was now paying claims with it advanced by the Yugoslav and French Governments. The seizure of property of war criminals raised the question of who was to determine who were the “war criminals” and what were the possibilities from that quarter. Finally, it was his understanding that the Deputies had been precluded from making such a study as he proposed by the provisions of paragraph 2 regarding the form of reparations. He suggested that there was nothing sacred about the figure 300 million. The Deputies should be permitted to examine Italy’s capacity as had been done in the case of Germany. It had worked there and should work here.

M. Molotov was agreeable to having the Soviet proposal accepted as a basis and to having the Deputies study the details, saying that he had not seen any other proposal.

Mr. Bevin felt that if the word “basis” were accepted, it would not mean that the Council had accepted the figures in the Soviet proposal.

M. Bidault did not know the meaning of the word “basis”, but stated that, basis or no basis, the French Delegation could not accept the proposal for the Deputies to study the question which did not take into consideration French claims for reparations.

Mr. Bevin felt that if the total capacity of Italy was to be taken into consideration, then he must record a claim on behalf of the British Government. This had been waived previously on the understanding that sufficient resources were to be left to permit an amelioration of the Italian economic situation. In determining the resources available for reparations the claims of all interested countries would have to be taken into consideration. Furthermore, as was done at Potsdam and London, the amount gone for relief would have to be considered. M. Molotov had said that the British worker did not bear the burden, but relief supplies had had to be bought abroad with dollars since Britain did not grow those things, and the requirements for foreign exchange had put a heavy burden on the worker. He had to take every precaution not to add to the difficulties in this connection. Finally, the British attitude on the question had been consistent from Potsdam until now. He did not object to any study as long as it was clearly understood that he was not bound to any set figures.

Mr. Byrnes desired that it be understood that his proposal was to transmit for study paragraph 3 only. He would have no objection to the committee of experts’ studying his proposal of last year and submitting a report to the Council, but if any other procedure were followed and a fixed sum were established in advance, it must be understood that the United States would have to insist upon its inclusion in the list of countries laying claim to Italian reparations. It was his opinion that the same principle as was applied to Germany should be accepted here. There was no adequate compensation for the losses incurred in war both human and material. What should be done was to follow the principle of leaving to Italy enough to subsist without outside aid and to assist her and every other country on the road to recovery. We would then be helping not only her but ourselves. Therefore the Council should nominate a committee, not necessarily the Deputies, which could examine the question and report back to the Council in a few days.

M. Molotov again referred to Italian war damage in his and other countries and the inability of their inhabitants to understand a failure of the Council to accept the Soviet proposal.

Mr. Bevin referred to Malta as a victim of Italian aggression, but emphasized that it was the British economic situation that he was principally thinking of, and re-asserted the impossibility of his agreeing to the payment of any reparations from raw materials or production supplied by his country.

M. Molotov agreed to Mr. Byrnes’ proposal for the appointment of a committee of experts on the condition that the Soviet proposal of three paragraphs be also referred to the committee.

Mr. Byrnes stated that he understood from his Deputy that heretofore the Soviet representative had not been in a position to consider the economic aspects of Italian reparations but only the over-all figure, and he wanted it clearly understood that the committee of experts would go into the question of Italy’s capacity to pay. He suggested that the thing to do was for the committee to examine this question and consider as well as the Soviet and United States proposals any further proposals Great Britain and France might advance. (This was agreed).

The following members were nominated by their respective Delegations to the committee of experts:

Soviet representative	Mr. Dekanosov
United States representative	Mr. Reinstein
French representative	M. Hervé Alphand

The British Delegation reserved the nomination of its representative pending consultation with London.²⁹

At Mr. Bevin’s request, supported by M. Bidault, it was agreed that no meeting of the Ministers would be held on Sunday.

It was agreed that the Deputies meet in the morning to determine what part of the Italian treaty should be dealt with by the Council tomorrow afternoon.

M. Bidault referred to the conference agenda in general, and said that although it had been examined slowly and carefully, point by point, no definitive agreement had yet been reached. He added that this would raise no difficulty for a while, but that sooner or later would rise in inescapable form. He was not pressing the matter, but simply wished to keep before the Council the extreme importance which his Government attached to the inclusion of the subject of Germany in the conference agenda.

It was agreed that the next meeting be held at 4:00 p.m. Saturday, April 27, and the Deputies’ meeting at 11:00 a.m. the same day.

The meeting adjourned at 7:00 p.m.

21. For a list of persons present at this meeting, see the Record of Decisions, infra.
22. Not printed; the substance of the Deputies’ report is contained in Couve de Murville’s oral presentation recorded here.
23. The reference here is to the Report of the Commission of Experts for the Investigation of the Italo-Yugoslav Boundary which was circulated to the Council of Foreign Ministers as C.F.M. (46) 5, April 27, 1946, p. 140.
24. The Report of the Trieste Free Port Committee to the Deputies, C.F.M. (46) 45, May 4, 1946, not printed, was not taken up by the Council of Foreign Ministers. The Committee reported that it had held six meetings in London and Paris and had had before it a draft convention by the United Kingdom Delegation, a draft convention by the Yugoslav Government, proposals by the Italian Government on the internationalization of the ports of Trieste and Fiume, and a draft convention submitted by the United States Delegation. The Report summarized the positions of the various delegations as follows:

    “In the view of the delegations of France, U.K., and U.S.A., the instructions given by the Council of Foreign Ministers last September obliged the Committee to proceed to make concrete recommendations for the establishment of a free port in Trieste under international regime, irrespective of what decision may be taken about the sovereignty over the territory.

    “In the opinion of the Soviet representatives in the Committee the definite draft of the convention for the régime of the international port of Trieste cannot be prepared until the main question of the sovereignty over Trieste itself is solved by the Foreign Ministers.” (C.F.M. Files: Lot M–88: Box 2061: CFM Documents)

25. Not printed. For the text of the preamble of the Draft Peace Treaty with Italy finally approved by the Council of Foreign Ministers, see Paris Peace Conference, p. 75. C.F.M. (D) (46)80 differed from the final agreed text only insofar as the following phrases appeared in brackets:

    In paragraph 2: “and bears her share of responsibility for the war”

    In paragraph 4: “Whereas after the said Armistice Italian armed forces took an active part in the war against Germany and Italy declared war on Germany as from October 13, 1943, and thereby became a co-belligerent against Germany”

    In paragraph 5: “thereby enabling the Allied and Associated Powers to support Italy’s application to become a member of the United Nations and also to adhere to any convention concluded under the auspices of the United Nations” (C.F.M. Files: Lot M–88: Box 2065: Deputies Documents).

26. Post, p. 126.
27. See the Protocol of the Proceedings of the Berlin Conference, August 1, 1945, Part II, Section 19, Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1485.
28. See Part V, Section 4 of the Protocol of the Proceedings of the Crimea Conference, February 11, 1945, Foreign Relations, The Conferences at Malta and Yalta, 1945, p. 979.
29. Sir David Waley was appointed as the British representative.