661.60C31/4–2749: Telegram
The Ambassador in Poland (Gallman) to the Secretary of State
641. We have delayed response to Deptel 228, April 11 [9]1 in hope some clarification status of Mine would indicate whether we might expect change in Polish economic policy, especially in pattern of east-west trade for which Mine stood. His re-confirmation as economic czar (Embtel 620, April 232), despite suspected intra-party controversy, impel belief that essential past attributes of Polish foreign trade policy will for present, at least, remain intact.
Department’s question now answered seriatim:
- 1.
- (a) and (b) Political benefits have been derived from postwar US loans and economic assistance but these have had negligible effect, if any, in retarding Sovietization of country. We do not think large loans would have retarded Sovietization appreciably or have promoted objective of preserving to Polish people capacity to determine their own political and economic orientation, so long as control over loans remained with Muscovite-directed Communists. Geography conspired against US objectives, despite an appreciative people. Nevertheless aid was beneficial in reassuring Polish people of our interest. Goodwill flowing from these acts has not been exhausted. Our former assistance and our continuing capacity to assist, in contrast to Soviet exploitation, has made Pole harder to orient to USSR than would perhaps otherwise have been case and has no doubt left imprint on nationalistically inclined Communists. The wishful thinking of type reported Embtel 421, March 193 still pervades broad segment friendly Polish opinion, North Atlantic Pact and recovery Western Europe under ERP have made more apparent our aims and strength and we should now be in position to explain to more receptive audience candidly that Soviet Union and Polish Government have visited economic penalties on Polish people by divorcing them from US’s immediate postwar intention of assisting in reconstruction of strong Poland in a free Europe. In view Soviet exploitation and inability ameliorate situation we should now propagandize economic weaknesses eastern bloc while explaining our determination to impede increase of Soviet war potential. Opportunity is thus presented to pass to propaganda offensive, justifying our economic policy and stimulating further passive resistance.
- 2.
- (c) and (d) We feel it is too late effectively to retard Sovietization of Poland through economic measures. Most we can now do is slow up Soviet timetable by stimulating passive resistance, especially of working classes. Our handling of Yugoslav situation and success of ERP will be watched closely, not only by non-Communists but by nationalistic Communists. Outcome will have crucial effect on Poles in reaching final judgment re inevitability of Communist victory. Therefore while seeking impede Soviet objectives re Poland and Polish [Page 108] public opinion, we should encourage such continued trade as is necessary to success of ERP and stabilization of Western Europe without adding appreciably to Soviet war potential. While opposed in principle to US or UN economic assistance to Poland at this time, we would not recommend that such be categorically denied or that more reasonable Polish development programs presented to ECE be rejected without consideration. We would prefer whole approach to be flexible. Aside from importance east-west trade to ERP we find at least two other reasons why trade with west, including US, serves our interests: such trade would tend to add to difficulties of Polish Government in discussing [dispensing?] with pro-western officials who form negotiating links with west and UN agencies, especially at technical level, and simultaneously it offers opportunities for economic intelligence.
- 3.
-
(a) We believe benefits US export control policy have out-weighted disadvantages and that it has unquestionably served as brake on economic-military planning in Soviet bloc and on growth of “Silesian Ruhr”. Policy has also pointed up to all but small hard-core economic weaknesses of Soviet Union in contrast with west and upon price being paid for Communist political orientation. These realities are and will continue to be source of embarrassment vis-à-vis people and future plans for industrialization. Temptation may be strong to tighten controls but this should in our view be resisted at this juncture because of strategic importance of ERP.
(b) We think, especially vis-à-vis Sweden and Switzerland, we cannot expect an east-west trade pattern to evolve which will deny Poland all items of war potential value. If competitively Western Europe recovers more rapidly than Eastern Europe and maintains present preponderance of industrial potential and “know how”, we feel relative power positions will remain to our advantage and that criterion of trade should be less one of denying Poland war potential per se, than of licensing items of possible war potential (except for minimum hardcore list), when goods received in exchange are of greater relative value to west. Possible dilemma, which Department planners must have in mind, is that unless we find non-dollar sources of supply alternative to Eastern Europe, it does not seem likely achieve balance of payments by end ERP period, unless exports which will accelerate industrialization of Eastern Europe are permitted. We know that certain Polish officials count heavily on such eventuation and are told Polish Communists committed to belief that competition between Western European countries, after recovery West Germany, for export markets will compel relaxation present controls in lieu of continued US subsidies, to advantage of Eastern Europe.
(c) We feel line of thinking in previous sentence presents pessimistic possibility which must be faced but that results to date are encouraging. With great effort, Polish steel production still somewhat under 2 million tons per annum and Czechoslovak production not much more. Our controls have retarded augmentation Polish production and we are confidentially informed by Lychowski that Soviet steel mill will not be completely installed until 1955. Steel, iron ore (principally Swedish), heavy industrial equipment, machine tools, precision instruments and electrical equipment remain perhaps principal Polish bottlenecks and we feel Poland must for some considerable [Page 109] period encounter difficulties in resolving requirements in these fields, especially as coal exports become less important. Problem as we see it is one of tactics, e.g. to what extent we can obtain its [our?] requirements without giving Poles what they want most, and of outcome of ERP, e.g., to what extent we will be able to solve balance of payments without exporting capital goods and war potential to Eastern Europe.
- 4.
- Cotton, dye-stuffs, textile equipment, tires, and even petroleum products have all constituted past opportunities for Polish-US trade. Though we would not dramatically relax controls, we believe gradual infusion somewhat more flexibility in our licensing policy vis-à-vis Poland would be helpful without adding to war potential. We might explore further the possibilities of making trade in greater volume contingent on settlement for nationalized properties. This would in any event have advantage of placing Poles on defensive and, if they should agree, of compromising future dollar earnings and retarding their industrialization timetable.
We appreciate Department’s offer to consult us re pending import and Polish export license cases and hope practice may be continued in future. Advantages are that it would keep us in closer touch with economy of [garble] present opportunities for economic intelligence of value.
Sent Department 641, pouched Belgrade, Berlin, Bern, Bucharest, Budapest, Brussels, Copenhagen, Geneva, Helsinki, London, Moscow, Oslo, Paris, Praha, Rome, Sofia, Stockholm, The Hague, Vienna.