Moscow Meeting of Council of Foreign Ministers

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Moscow Meeting of Council of Foreign Ministers

Moscow Meeting of Council of Foreign Ministers.

E.B. 

C. Council report contd. however review of work from Potsdam. Revealed diffies. of unanimity rule. Revealed failure to appoint central organn. (because of French) and to establish economic unity (because of Russians). Rpt. from Deputies contained views of Allied Govts. Said before I left agreement was unlikely.

a) Reparations from Current Production.

At Yalta Roosevelt and Stalin agreed provisionally on G. repns. of 20 billion dollars.
W.S.C. reserved his posn. and H.M.G. pointed out this wd.  absorb G's pre-war exports (or ? foreign balance)
Also : wd. have involved capital expenditure by G.B. and U.S. : or wd. have produced same situation as after last war when financing of repns. prodn. laid foundations for her w. potential. Also G. still owes us £30 m. fr. post-war loans of last time. I therefore took a negative attitude.
U.S. advocacy of 10%-15% at Potsdam – doubtless in effort to escape fr. F.D.R. understanding re 20 billions.  10%-15% of capital equipment. If steel was kept at 5.8 m. repns. deliveries wd. be quarter: this accounts for 5.8.  
Also U.S. suggn. of current deliveries to balance short-fall on once-for-all.  
I rejected tht. pending econ. unity and all in pool.
For if steel raised to 14 m. + 1 m. of that went in repns tht. wd. affect balance of G. economy and coal prodn. too.
Argued therefore cdn't accept any of this till balanced economy reached – and repayment arranged for supplies of food etc., Otherwise H.M.G. wd. be paying repns. to Russia.
Also worked out revised pol. and economic principles for 2nd stage (C.P. 68). This was a constructive and comprehensive scheme. Test to be applied – no further burden on B. Exchequer. Didn't close door to current repns. when favourable fr. balance secured and debts to U.S. and G.B. repaid.

b) Economic Unity and Level of Industry.

My aim was 11.5 m. capacity and 10 m. tons prodn. for steel. Aimed at keeping Ruhr. in B. Zone until full ec. unity achieved promised that then allocn. of prodn.. cd. be handled by 4 Power basis thro' C. Council.

c) Political Organisations.

Recalled aims. This : key point. R. began fr. centrald. G. Finally came down to orgn. based  mainly on Weimar. Warned tht. this gave ample powers to President and wd. lead to a Hitler. But R. v. keen – specially in reln. to Police etc., hoping no doubt to get Communist in M/Interior. I suggd. dropping all slogans v. Federalism : and setting out powers of Centre and leavg. rest to Länder. R. moved that way twds. end. Agreed to Länder Police, subject to some central provn. for co-ordinations and emergency action. On other functions eg. education they retained preference for centralised system.
French – other way – favoured indirect electn. to centre from Länder Govts. U.S. backed this. Found they were after control of electoral machinery as in States of U.S. French really wanted Balkanisation – leaving even finance of f. affairs to Länder.
Have brought R. and Fr. some way twds. Us: U.S. needs only clarifictn. Some hope here.

d) Peace Treaty Procedure.

Assocn. of other States. Procedure for defining frontiers.

Denazification.  Complete agreement on allowing German  authies. to complete process.

Demilitarisation.  Main diffy. was Dienstgruppen Believe we have no defence there.
Cd. be done by civil organn. Left tht. we will disband by end/47, save for minesweeping. R. have agreed to complete scrapping of warships by August.
Cat.1. Plants : viz., usable only for war purposes. (destn. delayed because of U.S. delaying of repns. I agreed to liquidation (complete by 1.7.48 – or wd. report to C. Council if delayed by labour diffies. We must deliver plant c. and
 w. and get on with it.
Cats. 2-4. Plants. Many are valuable for peace as well as war eg. fertilisers.
Declined to agree to liquidn. until new level of industry agreed and wd. then review the list. Told Berlin to do this on various steel basis – 10 m. or 12 m. Also said Germans shd. be told definitely what is planned. Asked for early report for submn. to Cabinet. When they can't dismantle, they shd. close : remove labour to other parts of economy.

Democratisation.  Reserved my posn. on P.R. because believe list system helped Hitler to power. But its general on Continent, French and others like it : and believe we may have to accept it. But ques. : shd. you count votes in Länder & not have a central list. Am considering that.
Land Refor.  We've bn. slow. Now agreed shall be done by end/47.
Only way of removing fear tht. Junkers will regain pol. prestige.
In B. Zone will be done at once on basis of 150 hectares.
Exchequer of Informn. democratic idea. Agreed, subj. to security risks.
Breakdown of Zonal barriers will be helpful.
D.P.'s, T.U.'S – no agreement. R. wants central T.U.'s : I wasn't ready to force that, tho' wdn't prohibit it. Freedom of Movement – we cdn't get agreement. At this stage had to make it clear I cdn't agree to anything particular until I saw general picture. We failed to reach agreement because of repns. R. wanted 4 Power control of Ruhr in isolation from other ques. Also demanded annulment of Fusion Agreemt. We told them they had forced this on us – was open to them and Fr. to join – but Fusion must stand until agreement reached on economic unity. They cdn't demand rights in our Zone while keeping their own as closed preserve.
Level of Industry : Steel.
R. suggested 10-12 m. tons. U.S. have now gone to 14 m. Having it all studied. U.S. also suggest 75/80% of 1938 as capacity to be left in G. industry as a whole. I must consider U.K. trade interests because capital requd. will have to be produced by western Powers. If we and U.S. cd. agree on level : clear up Cat 2-4 plants : before Nov., the situation wd. clear.

Liquidation of Prussia – agreed.
First round on a diff. subject. Exchange/views will help to make fresh approach.

Report of Deputies.  We took note and sent it back!
Main point of difference – participn. of other belligerents in preparing Peace Treaty. Doms. pressed this on us : Canada in a constructive and helpful way.
Their main point : permanent membership of Cttees. on actual drafting.
R. want that limited to 4 Powers.
R. have gone further in agreeing to consultn. : informn. services.

Composn. of Peace Conference itself. Thought agreed in N. York tht. all active belligerents wd. be in. But U.S. now demand all 54 who declared war v. Germany (in order to get into U.N.). This is to mobilise S. American votes. I cdn't agree to that. I proposed we limit it to active belligerents.
But put the others of 54 on informn. level. U.S. wdn't accept. That is remitted to Deputies.

Who should sign Treaty?  U.S. said no German Govt. shd. be allowed to sign. How then confirm? They said incorporate in G. constitution and let G. people adopt it by vote. That is adjourned too. Fr. opposed central G. Govt. at all.

Boundaries. Polish W. Frontier.  U.S. began by attacking it. I, differently, proposed Boundary Commn. to study it. Can't have empty land. Poles have filled up industrial area betwn E. and W. Neisse : but left large tract of agric. land below Stettin/Gdynia empty. That's why they are now keen to get Polish nationals back.
R. argued all settled at Potsdam. No one accepted that.

Saar. We've agreed to incorpn. in France economy. But French pushed Frontiers n. & w. and included 50.000 Germans. Told we can't accept that.

Belgian Frontier.  V. sound and small.

Dutch.  To compensate for damage at Walcheren etc. They have claimed territory worth £1 m. p.a. to Germany in f. exchange from oil and textiles. U.S. wanted it considered : but if it's to be done it shd. be done quickly.

Luxembourg. "Strategic" claim! Actually 2 Power stations. I've said can't transfer territory for those reasons.

Ruhr and Rhineland. Fr. abandon separation claim. Pressed for 4 Power control of Ruhr. We admitted long occupn. of Rhineland.
Four Power Treaty (Byrnes' Draft).
R. suggested addn. of provns. covering all disputed points on Potsdam etc.
Marshall refused to have that referred to Deputies.

At end/Conference M. said he wd. leave this on Agenda. Means U.S. will stay in Europe.
If we don't settle in November, small chance of getting agreement at all. The constructive proposals have come mainly from us. We can take credit for that – and shd. continue to ram it down the Party throat.

Repatriation of German Prisoners.
This has important bearing on our financial posn. Many refugees returning to B. Zone : but too few producers. 2½ m. producers as p.o.w. if we keep p.o.w. here for their labour. I can't produce the goods in Ruhr. Suggest Ty. shd. evaluate worth of G. labour here and set it off v. costs in G. We allowed £100 p.a. I believe.
France has 500.000 – many working in mines. So have Belgium and Poland.
Thought end/1949 wd. give us one more harvest, incldg. beet.
M/L. shd. help m'while to clear d.p.'s and get them in to place.

Austria.
This is a disappointment.
Deputies in 6 wks in Ldn. made some useful progress.
R. wdn't have it earlier on Agenda. Then got Deputies to resume : but cdn't get v. far.
Stumbling block was G. assets in Austria. What is a G. asset? I said : prs. Auschluss : or sold by G. Where taken fr. Austria, compensn. paid but not property shd. be regarded as asset. This definition wd. cover 120 works. R. definition 200. U.S. definition 100. But oil is another problem. Not sure what happened betwn. 1932-1939. R. allege we didn't develop it until Hitler forced it : therefore it is a G. asset. Tried 5 or 6 drafts to get it down to this. Suggested in London we shd. abandon formula and consider particular cases. R. rejected this. But in the end, at Moscow, R. proposed factual enquiry by a Commn. on each class of property. Diffy. over Art. 42 – U.N. property as a whole. Date suits us. But U.S. want it, too. Ques : shd. people gain who left Austria and adopted other nationalities? I indicated tht. if I cd. settle the property basis, …..
I wd. sooner hand this property back to restore Austrian economy.
R. pressed for repns. to Yugoslavia. We agreed to let them have G. property in Yugoslavia (which they wdn't return anyway!)
Power station : Hitler took water fr. Yugoslav stations. Proposed a Joint Austro/Yugoslav. Bd. to square it up between the 3 stations.

Agreed to exchange views thro' dipl. channel in prepn. for November mtg. Shall continue to work at it, in hope for November.

E.Sh. 

What is cause of conflict over future of Germany?  R. fear of U.S. fear of R.?

E.B. 

R. motive : if they delay long enough U.S. will leave Europe. But U.S. are now determined to stay. They will work on 4 Power basis, for rehabilitn. of Europe. V. diff. however, if it shd. develop into a R/U.S. conflict over wounded body of Europe. R., if she cd. develop central Police State in Germany and reach Rhine, they wd. control to Spain. U.S. will stop in Europe to prevent that.

Taken from C.M. 43(47) - Meeting held on 2 May 1947.