396.1–ISG/2–1251: Telegram
The United States Delegation at the Intergovernmental Study Group on Germany to the Secretary of State 1
Sigto 444. Re Tosig 409 repeated Frankfort 5500.2 Question of treatment of claims for postwar economic assistance was discussed at Steering Committee meeting February 9. USDel indicated inability to discuss issue at present time but promised would be able by about February 16 to indicate when matter could be taken up in Steering Committee.
British are pressing for initiation of discussions at early date on postwar claims. They have, in most recent discussions, taken position this issue must be settled first in order to permit determination as to what should be done re prewar debts. Failure on part of US to join issue in relatively near future will, in our judgment, be injurious to our position both on settlement of prewar debts and on settlement of postwar claims, including relationship to defense financing.
We can concentrate discussions for short time on prewar debt, providing we are able to put forth our views on this subject in context of overall arrangements. We consider it necessary as a minimum, that we will be able to say immediately that (1) all debts included in plan have to be scaled down, and (2) that the settlement of postwar governmental claims should not call for any payments in foreign exchange, or in marks useable to pay for creditor country’s current balance of payments deficit vis-à-vis Germany, except on basis that any such payments would be subordinated to Germans for exchange requirements [Page 1360] for the servicing of obligations arising from settlement of prewar obligations under the plan.3
We feel that position along above lines could be taken without prejudicing any of the Washington problems outlined in Tosig 409. It would leave open the question at what time and in what context the Germans would be assured of the scaling down of existing postwar claims and would leave open whole question as to manner in which marks might be collected against such claims and used for governmental purposes. If unable take any position re postwar claims USDel cannot set forth US position on German debt settlement as a whole and develop adequately and strongly our views on prewar debts. In Claims Committee, British have objected to adoption of principle of scaling down of prewar claims. At present time we are precluded by Department instructions from stating overall position relating this issue to German ability to pay.
Believe that taking position in accordance paragraph 3 above would permit us protect US negotiating position at current stage. However, any significant delay in establishing US position on postwar claims which can be put forward in discussion will completely tie up negotiations here. In this connection, significant that Federal Republic has expressed willingness to begin negotiations on postwar claims, as indicated Frankfort 554 sent Department 6641 repeated Paris 613,4 which will increase pressure for early tripartite decision here.