Difficulties – nothing to bargain with – no credits, coal or goods.
Also negotiations pending re sterling balances. Everyone waiting on them.
a) Peace Treaties.
Potsdam – unprecedented approach. Decision to appoint CFM taken before this Govt. elected. Decision to take satellites first was also reached. Clear then that R. wd. try to establish glacis. R. had also secured promises e.g. of Konigsberg : + Chinese territory includg. Kuriks before she came into war v Japan. R. had therefore secured most of her territorial claims before the Treaty bargaining began.
We were mistaken in asserting no territorial claims. Med. problem wd. have bn. easier today if we had claimed Cyrenaica (conquest) and let Egypt and Palestine go.
We prepared draft Treaties before 1st mtg. of CFM. In final form they don't vary much fr. our drafts.
4:3:2 principle produced gt. diffies Then Moscow : when U.S. suggd Peace Confce Supported by Evatt. Proved fertile cause of delay. Procedural diffies. Public discn made negotiations difficult. An understandg. reached tht. 0 recommns. shd. be taken seriously by CFM. But at N.Yk. Russians began by ignoring all recommns of Paris Conference and pressing own original views. Often thought it wd. be better to break off and try bi-lateral Treaties. Climax when U.S. Delegn. abstained from all comment and sat silent for a day. Then M. came off it and collaborated.
Started with Italian Treaty. Our principle was tht. while Italy must pay for her crimes and we must reverse some of consequences of Versailles, we shd. re-assert a democratic Italy and re-adjust frontiers in acc. with strategic ethnic and commercial consns French territorial claims : small adjustment agreed : joint control over waters on Alps shd. remove friction and make for economic development. Tyrol: agreement reached between Italy and Austria. Have put idea to them tht. Alpine countries shd. work for internatl electricity Bd. wh. will ensure hydro-electric power is used for economic development to all countries in area.
Colonies: U.S. proposal for 4 power trust delayed settlement for months. Led to suggn. of returning colonies to Italy. Found this wd. mean our using force v. Senussi. Agreed in end to p'pone for 12 months on basis tht. if no settlement then reached ques. shall go to U.N. Much feeling tht. Eritria shd. go to Abyssinia.
Italian Somaliland. Had to w'draw my plan for greater Somaliland.
Wd. have preferred to sink all that wasn't left to Italy.
In the end we had to share the ships all round.
Admy. now propose to use battleship as target. Hope not. Wd. rather give it to Italy on condn. she breaks it up for scrap. P.M. to enquire.
Balkan and Finnish Treaties. Protection of J. property in Rumania and Hungary.
Provision made shd. help Palestine problem.
Rightly handled, we can now get behind the iron curtain. These countries had struggles with M. because can't see how they can survive if wholly dependent on R. economy.
Diffy. over oil. Gt. opposn. to our view. Told R. they shd. nationalise outright or leave alone. In the end got 2nd choice enforced.
Size of Armed Forces. Limitatns. imposed leave reasonable strengths. But understand Bulgaria are establishg. organised militia as well!
Reparations. Tried to keep them low. Will be spread over term of years. R. is getting same : but finding now she can't have it both ways.
Having got these 5 Treaties settled, we can open up S.E. Europe.
Stood out for months for cession to Italy. But recognised in end that cession to either wd. create irredentist movement.
Compared with Danzig. But i) that served one country alone, whereas Trieste serves many countries besides Italy. A favourable situation for a "Itanseatic" port.
We agreed the French line; proceeded on basis of internationalisation.
May be that even now Italy and Yugosl. will come to some agreement.
Form of regime. R. trying to make it communist : U.S. trying to stop that. I thought that must depend on inhabitants and cdn't be regulated by Treaty. My aim therefore was to make sure that it wd. work.
Good plans for economic reconsn. in this area: and standard of life in Danubian Basin is bound to improve – and we shall benefit. I've made it clear we shan't obstruct close Ital. Yugosl. collaboration if they can make an accommodn. Believe Y. are coming round to that view. Encouraged by experience over Tyrol. Commercial mtg. ground in Trieste for Danubian countries. And if we can also create Danubian Commn. and rights of free navigation – that will help too. Tho' I'm sure we must concede cabotage to riparian States, extending from one territory to another.
i) Fusion of B. and U.S. Zones.
U.S. showed keenness to have our Zone: claimed they cd. quickly develop ruler for benefit of all. Terminated export agreemt. and wiped off 35 m. dollars. Fusion will mean less expense for us and more prosperity for Germany.
(ii) Economic Future of Germany.
Decided to proceed by Agenda.
R. asked for repts. on action under Potsdam.
I asked what capital goods, current prodn taken from all G. and what is total value of assets removed since occupn.
Evidence : R. Zone becoming deficit area. Guts of it removed. But M. constantly askg. for 10 billion dollars fr. current prodn. They can't get that save fr. Western Zones. U.S. are toying with idea of paying this price for a centralised G. I had to warn U.S. tht. we can't spend another dollar on G. I may be isolated for France won't be asked to pay.
When most of plan has bn. taken by R. we can't be expected to provide foreign exchange for rehabilitation. So we may appear to oppose Russia when what we are doing is to protect U.K.
(iii) Political Future of Germany.
Four views: France – a weak and powerless G.
Russia – a strong central Govt. wh. they wd. convert to Communm.
U.K. – major power in Provinces with surrender of some of their powers to a central Govt.
U.S. – as yet uncertain.
French action in Saar. To protect Fr. economic interests. But have gone rather far. But Blum has now invited us to discuss Monnet Plan.
And I want to revive France.
(iv) Forces of Occupation.
With effective 4. Power co-opn. we cd. reduce this strain on man-power.
Must avoid confrontn. of national armies. Consequence of Zonal plan.
Anxieties of French and Belgium because of nearness of R. troops.
Must therefore evolve a system of adminn. which will enable the Armies to be moved further away fr. one another. Also danger of Zonal arrangement crystallisg. into equivalent of new frontiers.
R. stubborn and inscrutable. Looked at one time as tho' she meant to split it. At this mtg. tension was less. They promised to settle at Moscow. If so, no ground for troops (on l/c argument) outside occupied Germany. With this in view I agreed that our l/c to Austria wd. be via U.S. Zone of Germany and not via Italy – as from 90 days fr. signature of Italian Treaty.
Agreed troops must w'draw from Italy w'in 90 days of Treaty being signed. This leaves us with only 5.000 in Trieste for prob. only 4 months.
Agreed with U.S. we would each provide 5.000.
Will prob. be imposs. to retain troops in Greece if after the 90 days. R. w'draw troops from Bulgaria.
Conclusion: Get away from the grip of U.S. and be a little more independent. Loan : food : They think we are begging from them. Don't realise we are paying for the food etc.
Taken from C.M. 1(47) - Meeting held on 2 January 1947.