396.1–ISG/2–2451: Telegram
The United States Delegation at the Intergovernmental Study Group on Germany to the Secretary of State 1
Sigto 470. PLI discussed by steering committee February 21 and 23. At first meeting committee discussed report by expert working party which had been requested to define items in schedule A which Germany may produce for NATO and other approved countries in period prior to agreement on German participation.2 Report recommended (reference Tosig 4243) granting permission to manufacture unarmed vehicles with armor up to 15 MM, which we understand little more than splinter protection. French representative Steering Committee rejected this proposal, which he said raised question of principle. He then retracted previous agreement to define what could be produecd after German participation in defense agreed, saying that this must be decided in light of what Germans agreed to contribute. It seemed obvious that French negotiators had, after having embarked on discussion, been pulled back by Paris.
Members of Steering Committee met informally on February 23 to review entire PLI negotiations. French representative said he had been unable to get authority to go beyond position stated by Massigli on January 31 (Sigto 4244), i.e. that he was unable to discuss British [Page 1368] proposal for two-phase relaxation reported in Sigto 458 (IGG/P(51) 20).5 He was prepared to agree to certain relaxations, but they could only be transmitted to HICOM, to be put into effect at some undefined future time to be determined by HICOM. He said he could agree to something along lines of British list for phase 1, except for steely bearings and synthetics. Re steel, he said French Government is prepared to remove limitation on production effectively as soon as there is satisfactory agreement on coal allocations. It might not be possible, owing to parliamentary considerations, to remove limit completely in form. However, effect could be achieved as practical matter by agreeing that all production in excess of 11.1 million tons would be regarded as production for defense. Limitations on steel capacity could be removed when investment provisions of Schuman plan did come into effect.
US and UK representatives pressed for a statement as to what circumstances would justify HICOM in placing relaxations in effects French representative admitted that, since French Government related relaxations to progress on defense discussions, this in effect means relaxations cannot be placed in effect until firm agreement on defense reached.
US and UK representatives challenged concept that revision of PLI should be regarded solely as concession to Germans and therefore used primarily as bargaining counter. UK representative said agreement on defense could not be reached for long time. During his recent visit to London Kirkpatrick had told FonOff it would not, in his judgment be completed this year. It would be impossible to stop all progress in Germany while defense discussions were being carried on. NY and previous agreements on Germany had envisaged continuing development of relations with Germans, which was independent of question of defense contribution. UK is prepared to consider changes in list of items which it had proposed as subject of relaxations in phase 1, but believed that firm agreement must be reached on what should be done in both phases, including time at which first phase would be made effective.
US representative said he was prepared to seek agreement on basis of UK proposal making clear that in phase 2 (when German participation in defense agreed), all industrial restrictions except these flowing from Brussels list must be ended. He was prepared to agree that steel limitations should be retained until Schuman plan ratified by Germans. He would consider retaining capacity limitations until investment provisions of Schuman plan were effective (but not beyond agreement on defense), provided agreement could be reached to introduce real flexibility in these limitations pending their complete removal. [Page 1369] It was essential effectively to remove limitations on new blast furnaces, which he pointed out would help to alleviate coke situation. He would also wish to have clear agreement that additional capacity would be permitted for seamless tubing and rolled products prior to effectiveness of investment provisions of Schuman plan.
In response to French statement United States was asking more than Germans, United States representative said Germans were asking for relaxations primarily for benefit of domestic economy and for domestic political reasons. Allies had larger interest and must avoid situation in which Germans used existence of controls as excuse for not producing goods needed by West.
US representative pointed out Foreign Ministers had publicly stated in September PLI would be reviewed. Delay in taking action up to now could perhaps be justified by failure of Germans to give undertakings specified in NY agreement. This matter will shortly be settled and action on PLI would then be expected. It would be impossible to defer all action until agreement reached on defense. While changes in German political situation are linked to agreement on defense, progress in development of economic relations could not be held up and was of interest to Allies themselves.
Alternates discussed French proposal that effort be made to agree on list of relaxations with issue of timing to be left to governments to resolve. US and UK representatives felt it would be impossible to proceed on this basis. It was agreed that in view of basic differences in approach on part of three governments, which related essentially to question of timing, no progress could be made in negotiations until this question resolved. Alternates agreed to report this conclusion to head of delegation and to ask for early plenary meeting (now scheduled for February 27).
Neither British nor French consider that any further progress in ISG is possible without high-level intervention in Paris. British propose that after position has been stated in heads of delegation meeting, representations should be made to Schuman by UK and US Ambassadors in Paris.6
- Repeated to Frankfurt and Paris.↩
- The report of the working party was circulated as IGG/P(51)21, dated February 21 (CFM files, lot M–88, box 196, IGG/P 19511–59).↩
- Not printed.↩
- Dated February 1, p. 1347.↩
- Regarding IGG/P (51) 20, see footnote 3, p. 1364.↩
- At the plenary meeting on February 27, Stevens as chairman of the steering committee reported that some progress had been made on the PLI but that clear differences existed between the French on the one hand and the Americans and the British on the other. Massigli questioned the desirability of referring the problem to the governments and suggested instead that it would be preferable to reach agreement on the relaxations to be made. After some discussion the plenary agreed to instruct the alternates “to attempt to reach a maximum area of agreement on relaxations with understanding that each delegation would set forth its view as to when relaxation should in each case become effective.” Sigto 477 from London, February 27 (396.1–ISG/2–2751).↩