Docs 30-87
Poland
30. Memorandum From President Eisenhower to Secretary of State Herter
//Source: Department of State, Central Files, 748.5 - MSP/1 - 2061. Confidential.
Presidential Determination No. 61 - 18 Washington, January 20, 1961.
SUBJECT
Determination under Section 451(a) of the Mutual Security Act of 1954, as amended, permitting the furnishing of economic credit to Poland
In accordance with the recommendation in your memorandum of January 20, 1961,/1/ I hereby determine, pursuant to Section 451(a) of the Mutual Security Act of 1954, as amended (hereinafter referred to as ``the Act"), that it is important to the security of the United States that up to $5,000,000 of funds made available under Section 451(b) of the Act be used as described in your memorandum for a credit by the Export-Import Bank of Washington to the Polish Government without regard to the requirements of the Act, the Mutual Security and Related Agencies Appropriation Act, 1961, and the Mutual Defense Assistance Control Act of 1951, and, from such funds, I hereby direct that $5,000,000 be transferred to the Export-Import Bank of Washington for the foregoing purpose.
/1/In this memorandum, Herter recommended immediate action to establish a legal basis for further consideration of the issue with the Polish Government ``with the understanding that the execution thereof be left to the new Administration" in the light of reports of a Polish trade agreement with Cuba. In a handwritten note at the bottom of the document, Eisenhower gave his approval subject to the understanding that such aid would not be offered to any country ``obviously hostile to us." (Ibid.)
You are requested on my behalf to give appropriate notice of this determination, pursuant to Section 513 of the Act, to the Committee on Foreign Relations of the Senate and the Speaker of the House of Representatives. The Secretary of Defense, the Director of the Bureau of the Budget, and the Export-Import Bank of Washington are likewise to be notified by you of this determination.
Dwight D. Eisenhower
The foregoing approval is subject to the terms of the memorandum of Secretary Herter for General Goodpaster of January 20, 1961, which is hereby made a part of this document.
31. Memorandum of Conversation
//Source: Department of State, Central Files, 748.5 - MSP/1 - 2361. Confidential. Drafted by Katz and initialed by Kohler.
Washington, January 23, 1961.
SUBJECT
Approach to Polish Ambassador Concerning Reported Polish Credit to Cuba
PARTICIPANTS
Romuald Spasowski, Polish Ambassador
Foy D. Kohler, EUR
Julius L. Katz, EE
Mr. Kohler informed the Ambassador that President Eisenhower had in principle approved the proposed $5 million credit to Poland, subject, however, to review by the new Administration. The reason for this, Mr. Kohler stated, was that subsequent to the Ambassador's last call in the Department, we have received reliable reports that Poland is offering long term credits to Cuba at aid-type interest rates. Mr. Kohler called attention to the provision of the Mutual Security Appropriation Act of 1961 (Section 110)/1/ which bars the use of funds appropriated under the Act to any country that provides economic and military aid to the Castro regime. A problem has therefore arisen with respect to the proposed US credit to Poland and we require all facts regarding the reported Polish credit offer to Cuba. Specifically, it is necessary for us to know a) whether the reported credit offer is correct; b) if correct, whether the offer has been accepted; and c) if accepted, the volume and intended utilization of the credit. Mr. Kohler pointed out that it was fair to say that the policy established under the law contemplated that we would not give help to other countries in order that they in turn might aid the Castro regime.
/1/For text of this act, P.L. 86 - 794, approved September 2, 1960, see 74 Stat. 776. Section 110 forbade U.S. aid to a government that provided economic or military assistance to the ``Castro regime" unless the President determined that the withholding of such aid would be contrary to U.S. national interest.
The Ambassador stated that he had some information on the matter but preferred to seek full facts and instructions from Warsaw. He felt it necessary, however, to express regret that Polish relations with Cuba were being linked to a credit from the US to Poland.
Mr. Kohler pointed to the requirement of the law which has been well-known to the Polish Embassy and, we assume, to the Polish Government. Speaking personally, Mr. Kohler stated that he could not understand how Polish involvement in Cuba could serve Polish interests. Poland had no real commercial interests in Cuba and its aid offers to Cuba would be regarded as obviously politically-motivated and as unfriendly acts towards the US. The Ambassador commented that the volume of Polish-Cuban trade was very small and should not stand in the way of US-Polish relations. At the same time, he realized that the Cuban issue was charged with emotion in the US and unwarranted conclusions could be drawn with respect to transactions which the Polish Government regards as normal from a commercial viewpoint.
32. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 748.5 - MSP/2 - 761. Confidential; Limit Distribution.
Warsaw, February 7, 1961, 4 p.m.
1119. Probably for reasons mentioned Embtel 1003/1/ Minister and Vice Minister Trade and more recently Gottesman, journalist said to be close to Rapacki, have been pressing me reopening discussions on new PL480 Agreement./2/ I have replied had no information on subject.
/1/Telegram 1003, January 16, reported a Polish approach concerning U.S. financing of a fertilizer plant. (Ibid., 748.5 - MSP/1 - 1661)
/2/Formally titled the Agricultural Trade Development and Assistance Act, enacted July 10, 1954; for text, see 68 Stat. 454.
Gottesman referred relative lack of impact our assistance to Poland with which we incline to agree while disagreeing his rationalization. According to Gottesman US should have made available in 1957 - 58 block credit of 300 million - 350 million for Poland's immediate use, either for agricultural products or capital equipment as regime saw fit. This of course was impractical and probably would not have brought us much more recognition in public eye since regime's will to accord us such public credit has been notably lacking. Especially in past year there has been practically no mention in press of amounts or intrinsic value US assistance.
If US disposed consider further PL480 Agreement point could be made by new administration we are disappointed with apparent unwillingness of Polish Government to accord due public recognition to scope and value of US economic assistance and cooperation. Since no political strings attached our assistance we are not asking for appreciation but merely actual recognition. Allusion might be made to pressing world food shortages, necessity PL480 priorities under expanding food for peace program and possibility that US agricultural resources might be utilized to better advantage elsewhere.
Perhaps not as sticking point but as leverage in negotiations we would like to reiterate proposal to reduce grace repayment period on any new PL480 agreement to 3 or 5 years in order to stimulate Polish planning and interest in agreeing promptly to projects to be financed by local currency as and when Battle Act amended. In this regard we note Poles agreed to 5 year grace period previous agreements, that extention to 10 years granted 1960 was designed ease balance of payments in relation to nationalization claims agreement pending at that time, and that extension did not involve commitment future agreements. Also note that Polish balance of payments position at least with US probably has improved over past months. Poland might well be required during course any negotiations to document their balance of payments position.
We believe Poland and bloc grain position through 1961 harvest probably sufficiently strained that Poland would accept 3 or 5 years. Also believe that 300,000 tons grain probably should be outside limit any PL480 Agreement prior completion 1961 harvest.
Beam
33. Memorandum of Conversation
Washington, February 10, 1961.
//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Official Use Only. Drafted by Tims and approved in S on March 3.
SUBJECT
Polish Ambassador's Call Upon the Secretary
PARTICIPANTS
Romuald Spasowski, Ambassador of the Polish People's Republic
The Secretary
EE--Richard W. Tims
The Polish Ambassador called on the Secretary at his own request. He stated that his call was primarily one of courtesy, but that he was leaving for Warsaw in ten days and would like to be able to tell his government the United States' views on certain subjects, particularly the President's proposal to explore uses of funds that had accumulated in Poland from U.S. sales of commodities under PL 480. He asked whether there was anything he might say regarding the United States' ideas of such uses as well as how soon the bilateral discussion of them might be expected to start.
The Secretary replied that the negotiation of this matter naturally would depend on when Congress might amend the Battle Act./1/ In any case, he thought formal negotiations might well be preceded by informal discussions at that time. The United States was thinking, he said, of projects in which the United States and Poland could cooperate for peaceful and friendly purposes, such as research for the solution of problems in medicine and agriculture, for example, as well as undertakings for broad benefit in economic and related fields.
/1/For text of the Mutual Defense Control Act of 1951, P.L. 213, approved October 26, 1951, see 65 Stat. 644.
The Ambassador said that in another field, that of cultural exchanges, Polish-American relations had developed in gratifying fashion. He said that upon his return from Warsaw he would like to take up with the Department the question of working out an informal agreement to facilitate a further improvement of planning in this field.
The Secretary said that there were two points he would like to emphasize to the Ambassador at this time, regarding the current status of United States-Polish relations. First, he said, he believed these relations were on a solid foundation of friendship and interest, and the United States sincerely wanted to see them continue and develop. Second, there was a critical area of which the Polish Government should take careful note in these relations, that of Cuba. The United States, he said, must take the gravest view of any move from outside this hemisphere to set up or assist an alien power within it. The Monroe Doctrine was very much alive, whatever changes may have occurred in ways of enforcing it. He said he believed Poland's relations with Cuba were of marginal importance compared with its relations with the United States, and it was to be hoped that Poland would not jeopardize the latter by extending aid to the present Cuban government.
The Ambassador replied that Poland's relations with Cuba were only normal trade relations, and that Poland could not say it would refrain from such normal trade with any country. However, he said he understood the United States' viewpoint which the Secretary was enunciating, and he would report it to his government.
The Ambassador in closing said that he wished to make a statement about Polish-German relations. In general, he said, Poland's views were well known. Regarding the most recent development, however, involving certain approaches to Poland by the German Federal Government ostensibly in the interest of improving their relations, he wished to say that the Polish Government was unable to take them seriously. They did not feel that there was any sincere intention behind the German moves, because these were counterbalanced by contrary German statements and actions which continued to go on at the same time. The Ambassador said he understood the Secretary would be seeing German Foreign Secretary von Brentano in Washington next week, and he was telling him these things in the hope that he would bear them in mind during his talks with von Brentano./2/
/2/Brentano visited Washington February 17.
The Secretary replied that he of course could not speak for the motivation of the German Government in the matter alluded to, but that he was interested in having the Ambassador's views on the subject and would bear them in mind.
34. Memorandum of Conversation
Washington, April 10, 1961.
//Source: Department of State, Central Files, 611.48/4 - 1062. Official Use Only. Drafted by Tims and approved in S on April 17.
SUBJECT
Review of Polish-United States Relations by the Polish Ambassador
PARTICIPANTS
Romuald Spasowski, Ambassador of the Polish People's Republic
Dr. Marian Dobrosielski, Counselor of Embassy
The Secretary of State
EE--Richard W. Tims
The Polish Ambassador called at his request following his return from a month's consultation with his Government in Warsaw.
The Ambassador said that while in Warsaw he had reviewed Polish-United States relations with Foreign Minister Rapacki, Politburo member Ochab, and other high officials, and that he would like to report to the Secretary on a number of points. His Government was pleased, he said, with the development of cultural exchange over the past year and would like to see it go still further, particularly the exchange of persons. They would also like to make an arrangement with the United States for technical assistance. In the field of consular relations the Ambassador said that his government was generally satisfied, but that the right to establish a consulate in New York City was one improvement which they would like to request. They would prefer to issue only diplomatic visas at Washington and to move their consulate from there to New York, where it would be much more useful to them, he said.
In the field of economic relations Ambassador Spasowski said his Government hoped to see a number of developments. They wished there could be a broader licensing of exports of industrial equipment. They were interested in obtaining investment credits from the United States, in addition to the $5 million credit recently negotiated and still pending. As regards trade, they hoped that the question of dumping recently raised against certain Polish exports would be cleared up. The Ambassador wanted the Secretary to know that this question had aroused serious concern in high quarters in Warsaw, since it threw the planning of exports into a state of uncertainty and threatened to delay the expansion of Polish-United States trade which had been counted on after the granting of most-favored-nation treatment last fall.
The Ambassador said his Government was actively looking into the question, raised by President Kennedy in his State of the Union message,/1/ of finding appropriate uses for Polish currency owned by the United States, and would be ready to negotiate this matter formally when the Battle Act was amended. Meanwhile, he said, they did not look with favor on a direct discussion of this subject with Polish institutions by visiting representatives of private American organizations, and they also hoped that its discussion by the Congress would not involve airing of difficult political issues.
/1/For text of the State of the Union address, January 30, see Public Papers of the Presidents of the United States: John F. Kennedy, 1961, pp. 19 - 28.
The Secretary remarked at this point that we would favor starting informal discussions of ways to use the PL 480 proceeds, even before amendment of the Battle Act.
Ambassador Spasowski next stated that he was instructed to say his Government would like to begin negotiation with the United States of a three-year agreement to obtain further grains, cotton, and oils under PL 480. The Secretary queried whether such a time span might not have drawbacks in view of the impossibility of foreseeing all the complexities that far ahead, particularly outside the economic field. The Ambassador replied that they counted on a continued detente in political relations and that a longer period than the previous annual loans would facilitate planning and stability.
In concluding, the Ambassador remarked that his previous call on the Secretary had happened to take place on the eve of German Foreign Secretary von Brentano's visit here, and that by a coincidence his call today just preceded the visit of Chancellor Adenauer./2/ Apropos of this he wanted to repeat that his Government's views about Germany had not changed. They felt more than ever that the Adenauer government was a menace because it supported groups demanding territorial revisions and because it was building up an aggressive military potential.
/2/Adenauer visited Washington April 12 - 13.
Before leaving, Ambassador Spasowski informed the Secretary that he was being withdrawn from his Washington assignment and that in the next few days agreement would be requested for his successor, Mr. Edward Drozniak, the present Deputy Minister of Finance and President of the Bank of Poland.
The Secretary complimented the Ambassador for his conduct of the mission to Washington during a period which had seen United States-Polish relations take a significant turn for the better, and expressed the hope that they might meet again in the future.
35. Telegram From the Department of State to the Embassy in Poland
Washington, May 6, 1961, 1:57 p.m.
//Source: Department of State, Central Files, 411.4841/5 - 661. Official Use Only. Drafted and approved by Vedeler.
1244. In separate luncheon conversations with Department officers May 5 Lychowski and Raczkowski raised questions re beginning of negotiations for new PL 480 agreement. They were informed that we preparing for negotiations and undertaking necessary paperwork at once. When pressed for exact date for initiation negotiations we said while we could not state with certainty we hoped begin discussions at least by last week in May. Pointed out we faced with difficulties such as recent speeches Jaroszewicz and other Polish leaders sharply attacking US which had held back beginning discussions.
Also pointed out to Lychowski another problem this connection was exorbitant figure 2.50 million zlotys Warsaw city authorities asking for relocation tenants from Zawrat 6 which US desired for site Ambassador's residence (your letter to Vedeler April 14)/1/. Said this matter had come to attention of Congressman recently visiting Warsaw and this Congressional interest further reason for working out acceptable compromise; in effort reach reasonable settlement we willing pay half of 2-1/2 million figure. Lychowski's assistance sought in disposing this problem and he indicated he would communicate with Warsaw.
/1/Not found.
In response Raczkowski's question re prospects for $5 million credit he informed matter under active consideration but events of recent weeks have not helped Polish case.
Bowles
36. Memorandum of Conversation Between the President's Deputy Special Assistant for National Security Affairs (Rostow) and the Economic Minister of the Polish Embassy (Lychowski)
//Source: Department of State, Polish Desk Files: Lot 67 D 238, PL 480 Negotiations 1961. Confidential. Drafted by Rostow.
Washington, June 5, 1961.
Dr. Lychowski called on me today, Monday, June 5, 1961, to assure that the U.S. Government, at a sufficiently high and responsible level, understood fully the political implications, as he saw them, of the PL 480 negotiation in which he is now engaged.
He believes that if we proceed with this long run agreement there will be two major political consequences. First, American industry will be brought into intimate contact, over a wide range, with Polish industry. I asked him what political basis there was in Poland for such an intensification of contact. He said that Gomulka had fought and won a major battle; namely, a battle to permit Polish industry to develop on lines of comparative advantage with respect to the international economy as a whole rather than merely on the basis of the requirements of the Communist bloc. He stated that there were, perhaps, five years in which Poland could make good on Gomulka's policy which evidently went to the degree of long run political independence that Poland might be able to enjoy. And the proposals leading to more intimate association between American and Polish industry were, in his view, crucial to the success of Gomulka's policy.
Second, with respect to agriculture, the use of counterpart funds in the rehabilitation of Polish agriculture, combined with the tiding over of the Polish food deficit, would not only guarantee that the relatively free condition of Polish agricultural life would be maintained but that the U.S. would be associated in an intimate relationship with that 47% of the Polish population which is still in rural areas.
In general, he expressed the hope that the decision on his proposals would not be taken on the American side without a full appreciation of the political implications as seen on the Polish side. To understand these implications required both political insight and professional economic knowledge of the proposals. It was for that reason, he stated, that he had approached me.
WR
37. Memorandum of Conversation
//Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. Official Use Only. Drafted by Vedeler and approved by the White House on June 21.
Washington, June 15, 1961.
SUBJECT
Farewell Call of the Polish Ambassador
PARTICIPANTS
The President
Ambassador Romuald Spasowski, Embassy of the Polish People's Republic
Harold C. Vedeler--EE
The President opened the conversation by commenting on the change in US-Polish relations that had taken place during the Ambassador's stay here of the past six years. The President said that he understood the Ambassador had done much to help in this development and had been very cooperative. The President was sorry to see the Ambassador who had contributed so much to these relations leave from his pres-ent assignment. The Ambassador replied that he had tried to do all he could to assist in this improvement.
The President said there had been some recent statements which were not helpful to these relations but he did not believe that they would do any fundamental harm to them. He continued that it was important to have harmonious relations between the United States and Poland since this contributed to reduce international tensions of a general nature. The Ambassador heartily agreed to this last statement and added that his Government wanted to see the further growth of these relations.
The Ambassador then said that he would like to raise two points before leaving. The first of these was economic in character and related to the continuing interest of his Government in the further expansion of economic relations between Poland and the United States. In this connection he mentioned the economic negotiations now in progress and expressed the hope that there would be another agreement for a PL-480 transaction. He also referred to the matter of an industrial credit for Poland indicating that his Government hoped that attention would be paid to this interest of Poland. He would be extremely glad if such negotiations would not be too prolonged and, alluding to a statement of the President, he said the results of the negotiations should not be too little and too late.
In introducing the second matter that he wished to raise he mentioned that he had discussed several times in the Department during his stay in Washington the German question and its significance for Poland. A focal point of the German question for Poland was the German-Polish border and he desired to recall that the Polish people could not understand the lack of a clearly defined American position on this subject. He said it would be much better for US-Polish relations if the United States Government could make a definitive statement on the boundary.
The President replied that the question of the border was connected with the problem of Berlin. It was difficult for the United States to take a position on the boundary question opposed by the German Government and at the same time to obtain any settlement of the Berlin question. As the Ambassador was aware the United States has maintained the position that it was not possible to settle the boundary question until there was a German peace settlement. But if an understanding could be reached on Berlin then some of these other problems might be resolved. The President said that he knew of course how the Polish people feel about the border question. The Ambassador concluded his remarks on the subject of the German-Polish boundary by reiterating that a statement by the United States on this subject would substantially assist relations between the United States and Poland.
The discussion then turned again to economic relations between the two countries. The President said that the amendment to the Battle Act had been passed by the Senate and was now in the House. It was indicated that discussions looking toward a new PL 480 agreement were in progress and that the agreement was expected to be concluded in several weeks. The Ambassador expressed his disappointment that it had not been possible for the United States to extend the credit of $5 million to Poland which had been under discussion from the previous administration. He then referred to the declining curve of industrial credits for Poland pointing out that credits of $30 million had been extended in 1957, $25 million in 1958, $6 million in 1959 and none in 1960. It was explained that while an industrial credit of $5 million had been under consideration for some months problems had been encountered by the US Government because of the extension by Poland of a credit of $13 million to Cuba. It had accordingly not been possible to complete action on this matter during the present fiscal year and the allocation had been lost. The question of further industrial credit to Poland would need to await consideration in the next fiscal year. (At this point the President said that he would like to have from the Department a background paper on the previous request of the Poles for a $5 million credit and on their current interest in industrial credits.)
The President then asked who the Ambassador's successor would be and the latter replied that Mr. Drozniak, an extremely able man, would be coming to Washington soon to take his place. The President asked what the Ambassador would do as his next assignment to which the Ambassador replied that he would be in charge of African and Asian affairs at Warsaw.
The President inquired what the extent of the trade was between Poland and France. The Ambassador said he was not precisely informed about the extent of the current trade between the two countries. As for the trade between Poland and Britain it amounted to $50 million on one side and Polish exports to the United States during last year reached $37 million. The Ambassador commented that economic relations between Poland and the United States had increased substantially and said that his Government anticipated a further increase in exports. He said that ham which the Americans liked constituted the principal export to the United States. The President asked if the formation of the Common Market would present problems for Poland and the Ambassador stated that it would.
As the Ambassador was about to leave the President said that he had been extremely cooperative and had apparently done much for the benefit of the relations between the two countries. The Ambassador noted the special interest in Polish affairs which the President had taken, expressed appreciation of this and the hope that this interest would continue. In saying goodbye the President indicated that he had a new reason for interest in Polish matters since his new godchild was on one side of Polish descent.
38. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/7 - 2461. Confidential; Priority; Limit Distribution. Drafted by Katz; cleared by Blumenthal, Tyler, and the Department of Agriculture; and approved by Kohler.
Washington, July 25, 1961, 8:43 p.m.
124. Embtel 140./1/ Program outlined Deptel 101/2/ based on high level consideration relevant factors, including supply situation in Poland, requirements our policy toward Poland, question whether policy should be maintained, effect of Berlin crisis on policy and effect PL 480 program on Berlin contingency planning. Have given careful consideration recommendations contained recent Embassy communications and have had full discussion with Donnelly, who argued effectively for significant cut from last year's program. While proposed program developed subsequent Donnelly's departure and cannot claim it has his endorsement do not believe it inconsistent his argumentation.
/1/Telegram 140, July 24, stated: ``Cannot concur program outlined Deptel 101 and hope will not be presented Polish delegation pending our considered comments." (Ibid.)
/2/Dated July 21. (Ibid., 611.4841/7 - 2161)
Decision proceed with program at this time based principally on judgment it essential if policy toward and present relations with Poland to be maintained. Failure proceed at this time would be interpreted as measure connected with Berlin crisis. This would be counter to posture we wish to assume at this stage crisis.
While level of program could be open to differing views believe there is minimum essential level required to maintain present degree Polish dependence on US. Providing too little may be worse than nothing at all. Extreme short tether approach as suggested your G - 555/3/ would in our judgment lead Poles reevaluate their relations with us./4/
Letter follows./5/
Rusk
/3/Airgram G - 555, June 23, reported Embassy comments on Lychowski's statement on the Polish position in economic contacts. (Ibid., 411.62041/6 - 2361)
/4/In telegram 152 from Warsaw, July 26, the Embassy reiterated its concerns and outlined its objections to the size of the proposed Polish economic assistance program. (Ibid., 611.4841/7 - 2661)
/5/Not found.
39. Memorandum From Secretary of State Rusk to President Kennedy
//Source: Kennedy Library, National Security Files, Country Files, Poland. Confidential.
Washington, July 27, 1961.
SUBJECT
Report on Status of Pending PL 480 Negotiations with Poland
Pursuant to your request, made during the call of the Polish Ambassador on July 19,/1/ there follows a report on the status of current PL 480 negotiations with Poland.
/1/A memorandum of President Kennedy's July 19 conversation with Ambassador Drozniak is in Department of State, Central Files, 611.48/7 - 1961.
As I indicated in my memorandum of June 22,/2/ reporting on the background of United States assistance programs to Poland since 1957, a new round of economic talks was initiated with Polish representatives at Washington on June 2. In its initial presentation, the Polish side expressed interest in (1) a large, four-year Title I agreement under PL 480 (sales for Polish currency); (2) a Title IV, PL 480 agreement (long-term dollar credit) for commodities ineligible under Title I; (3) purchase of $150 million worth of United States industrial equipment and technology over the next four years to be financed out of private and United States Government credits and Poland's own funds; (4) a technical exchange agreement; and (5) utilization of PL 480 zloty proceeds on flood control and other land improvement projects.
/2/Not printed. (Ibid., 785.5 - MSP/6 - 2261)
In response to the Polish presentation, the United States representative stated that due to legal obstacles, pending legislation and international political uncertainties, we were not prepared at this time to consider long-term arrangements under PL 480. Neither were we prepared to consider credits for purchase of industrial goods. We were prepared however to consider (1) a one-year PL 480 agreement under Title I; (2) increased Polish industrial purchases in the United States without reference to United States credits (i.e., out of Poland's own dollar resources); (3) a possible technical exchange agreement; and (4) uses of United States zloty holdings for projects in Poland which might be possible in the event the Battle Act is amended.
Our discussions with the Poles over the past month have concentrated primarily on the subject of a possible one-year PL 480 agreement. The Poles have requested a program amounting to $190 - $200 million. We are now conducting third-country consultations on a program of $91 - $125 million. It is our intention, however, to hold the program, if agreed upon, close to a level of $100 million.
In view of heightening tensions arising out of the Berlin crisis there is a question whether we should now proceed with any further agreements with Poland. I note that in your conversation with the Polish Ambassador on July 19, you alluded to this question. I believe that a refusal on our part to conclude a PL 480 agreement with Poland in the next few weeks would have serious consequences in our relations with Poland and might well mean the end of the special relationship with that country which has developed since the advent of the Gomulka regime. The Polish Government would conclude that it could not rely upon the United States as a source of supply for important agricultural commodities and would move quickly to make other arrangements. It would seek imports from other sources, including the USSR, but would probably also introduce a series of restrictive measures at home upon consumers and upon the peasantry.
I do not believe that the time has yet come when we should abandon our present policy toward Poland. Maintenance of Poland's dependence upon the United States for agricultural commodities may in fact be useful since it may encourage Gomulka to exercise some restraint upon Khrushchev, although this hope should not be relied upon. The principal problem we face, however, is that of explaining publicly the conclusion of a $100 million program for Poland at a time when we are facing the Berlin threat and are taking military and economic measures to meet this threat. I think this explanation can be made. I would recommend that your address to the nation on July 25/3/ establish the general posture that it would be undesirable to alter precipitately those established relations and policies we have developed toward the countries of Eastern Europe pending further developments and a more precise appraisal of Soviet intentions and actions regarding Berlin. If this is done, conclusion of an agreement with Poland in the coming weeks can be justified by reference to this general posture.
/3/For text of the President's address, see Public Papers of the Presidents of the United States: John F. Kennedy, 1961, pp. 533 - 540.
If you agree with this reasoning, we would like to present our initial PL 480 proposal to the Poles early in the week of July 24./4/
Dean Rusk/5/
/4/Minutes of the U.S.-Polish meetings are in Department of State, Polish Desk Files: Lot 67 D 19.
/5/Printed from a copy that bears this stamped signature.
40. Memorandum of Conversation Between the President's Deputy Special Assistant for National Security Affairs (Rostow) and the Economic Minister of the Polish Embassy (Lychowski)
//Source: Department of State, Polish Desk Files: Lot 67 D 238, PL 480 General. Confidential. Drafted by Rostow.
Washington, August 4, 1961, 11:45 a.m.
Dr. Lychowski called on me today. He made the following points.
1. The Polish government will announce that its harvest this year is about 1.4 million tons greater than last year's harvest. This figure will be false. The true increase will be of the order of magnitude of 5 - 600,000 tons. He said the reason for the lie was that Gomulka was under very heavy pressure from other Communist parties to go back to collectivization. He wants to be in the position of saying that his method works well. Further, Dr. Lychowski stated flatly that the Soviet grain harvest this year will be bad. The 400,000 tons of grain deliveries to Poland from the Soviet Union will come; but they will come late. In the light of the modest increase in the Polish harvest and the probable slowness in Soviet deliveries, he expressed the hope that we would find it possible to provide at least the same amount of grain under the PL 480 agreement as we did last year. That is, he said, 1.4 million tons. He advanced two political arguments for our continued support at this level. First, that we should help Gomulka continue to avoid collectivization (he described his mission in Washington as ``helping the Old Man" maintain his agricultural policy); second, that Soviet tourists from the western provinces of Russia to Poland are increasing, and an ample Polish supply of bread and meat in Poland is good propaganda. He stated that in Russia, while the cities have enough bread, there is some trouble with the bread supply in the provinces.
2. He raised the question of whether, in line with a contingent agreement with the Eisenhower Administration, we might find it possible to allocate in FY 1962 $5 million from the contingency fund via the Export-Import Bank for the purchase of industrial equipment in the U.S.
3. He told me of the Western European complaint that U.S. PL 480 grain was permitting Poland to increase its exports of animal products to Western Europe. He stated that the Department of Agriculture has a long reply to this charge. If it were regarded as a serious matter by the U.S., Poland would be prepared to buy feed grains for dollars in the U.S. up to a limited amount, to be financed through the Export-Import Bank via the contingency fund; or, alternatively--as I understood his argument--Poland would be prepared to buy feed grains in dollars if the contingency fund were used to finance an equivalent amount of the transport costs of PL 480 grain shipments.
I received these statements without comment.
W. W. Rostow/1/
/1/Printed from a copy that bears this typed signature.
41. National Security Action Memorandum No. 75
//Source: Department of State, S/S - NSC Files: Lot 72 D 316, NSAM 75. Confidential. A copy was sent to the Director, USIA.
Washington, August 20, 1961.
TO
The Secretary of State
(SUBJECT
Polish Government Taxes on Relief Packages)
Is there anything we can properly do to persuade the Polish Government to lift their present restrictions in taxes which Polish recipients of a relief package must pay. I understand that shipment of used clothing makes up the bulk of the traffic./1/
/1/In a memorandum to the President, October 19, Secretary Rusk reported that Polish customs levies had been reduced and that discussions with approximately 150 recipients of these packages produced only three complaints, all related to duties on new clothing imports. ``The Embassy expressed its continuing belief that the new tariff presents no difficulty to recipients of normal gift parcels." (Ibid.)
John F. Kennedy/2/
/2/Printed from a copy that bears this typed signature.
42. Memorandum From the Assistant Secretary of State for Educational and Cultural Affairs (Coombs) to President Kennedy
//Source: Department of State, S/S - NSC Files: Lot 72 D 316, NSAM 74. No classification marking. Drafted by Coombs. Attached to a memorandum from Battle to Bundy, August 25. This memorandum replied to NSAM No. 74, August 20, which reads: ``Is there any pressure that we should put on the Polish Government to permit exchange students to be selected by American foundations rather than the Polish Government?" (Ibid.)
Washington, August 24, 1961.
SUBJECT
Polish Exchange Program
The problem you raised about the selection of Polish recipients of private foundation grants has just been resolved--at least for the pres-ent.
On August 22, under threat by the Ford Foundation to terminate the program, the Polish Ambassadors to the United States and United Nations gave satisfactory assurances to Mr. Stone of the Foundation that their government would withdraw its objection to most of the grantees in dispute. You may be interested in the attached details./1/
/1/Not found.
During a courtesy call in my office on August 24, the new Polish Ambassador reaffirmed to me that the issue between his government and the Ford Foundation had been happily resolved. He personally is anxious to expand educational and cultural exchanges between Poland and the United States. At his urging, the Polish embassy here will soon have a cultural attache.
I indicated that we are prepared to cooperate in an expanded exchange effort. We will meet again in a few weeks to discuss concrete plans.
Philip H. Coombs/2/
/2/Printed from a copy that bears this typed signature.
43. National Security Action Memorandum No. 79
//Source: Department of State, S/S - NSC Files: Lot 72 D 316, NSAM 79. Confidential.
Washington, August 25, 1961.
MEMORANDUM FOR
The Secretary of State
I have examined the question of the economic negotiations with Poland, and concluded that it would be desirable to come to an agreement incorporating the present State Department offer of 500,000 tons of grain and the Polish request for a promise of a review in the light of the actual size of the Polish harvest. I think the agreement to review should be used as a means of getting better performance from Poland in respect to: (a) information to the Polish people on American aid; (b) the selection of exchange students, which should be done by our Foundations, rather than the Polish Government; and (c) to the extent that the law permits, use of counterpart zloty on projects such as schools and hospitals, which demonstrate to the Polish people American concern for them.
John F. Kennedy
44. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 811.0048/10 - 161. Secret; Niact.
Warsaw, October 10, 1961, 1 p.m.
653. US economic relations comprise mixture numerous activities inter-related with informational and cultural programs and broad political considerations. Re Deptel 538/1/ important any review US trade and aid policy Poland differentiate specific economic activities and evaluate their relationship other fields.
/1/Telegram 538, October 7, reported that the United States would instigate a policy review of its relations with Poland. (Ibid., 448.119/10 - 761)
Basic economic activity is mutual commercial trade. Actual and potential benefits of increased dollar earnings from growing exports to US are a major Polish regime incentive to exercise some restraint in its relations with US. Conversely, significantly reduced export expectations especially if due US Government restrictions would weaken US influence potential and probably evoke bitter regime recriminations of bad faith in view mounting Ex-ImBank, PL - 480, and nationalization claims re payment obligations over next years. On import side, Polish purchases US goods relatively unimportant to Poland except for high technology already limited by export licensing procedures. Complete discontinuation licensing US exports to Poland mentioned reference telegram will not seriously pinch Polish economy unless in concert other NATO countries. Unilateral refusal all licenses by US would, however, create ill-will Polish regime to no useful purposes but would result diversion Polish hard currency earnings to other Western suppliers who already have competitive advantage due geography, ability offer credit terms, and more expeditious licensing procedures. Furthermore, this would be contrary US effort maneuver Poles into increased purchasing and dependence US market, and would offer ready-made anti-US propaganda.
Most important economic activity in terms actual and potential US influence is PL - 480 grain deliveries for which Poland has real immediate and long term need. Expectation US may meet major portion this need is the major tangible and negotiable Western restraint on Polish regime. Its removal would stimulate retrogressive domestic forces and promote further deterioration US-Polish relations with adverse effect other US programs in Poland. PL - 480 is the major component of the economic framework constructed by US over past five years to support a wide range of US informational and cultural programs and facilitate general US access here. However imperfectly this framework may be operating at present, it does serve to maintain US-Polish communication at a scope and depth unique to the Communist bloc.
While further US Government and private credits primarily for industrial purchases are greatly desired by Poland, there is no reason believe regime prepared make any significant concessions obtain them. Also such credits not essential element maintenance reasonable level relations. Other important but not critical activities in US-Polish economic relations include US Government support private US charity programs, direct remittances, including PL - 480 local currency projects, etc. While these carry economic benefits, they also serve enhance US presence in Poland.
Pending and potential economic activities include ICA technical assistance, the President's local currency ``Projects for Peace". Regime appears interested former but reluctant latter since they could and should involve major expansion US influence.
In sum, continuing and prospective economic benefits provide tangible supporting framework of US-Polish relations as well as probably most effective--but by no means totally effective--points of leverage on the regime. Accordingly it essential this framework be maintained through current stresses in order that it may be exploited to preserve and as opportunity presents expand US influence.
Embassy recommendations
A. Trade.
1. That no attempt be make at this time to interfere with the commercial development of Polish exports to the US;
2. That licensing of US exports to Poland be continued according to previous criteria for the time being.
B. PL - 480.
3. That the broad policy concepts of PL - 480 assistance to Poland be maintained for the present;
4. That the pending PL - 480 agreement with Poland be concluded as promptly as domestic and international circumstances permit;
5. That more US desiderata be negotiated into or concurrently with PL - 480 agreements with Poland.
C. Aid--Other activities.
6. That industrial credits be denied Poland short of major improvement US-Polish relations;
7. That private US charities operating in Poland continue to receive US Government support as effective means expressing US concern for Polish population;
8. That other non-critical economic activities in Poland be continued at this time.
D. Aid--New activities.
9. That planning for modest ICA technical assistance project be readied for implementation when circumstances permit, as vehicle for US influence in Poland;
10. That US planning and discussions with Poles for ``Peace Proj-ects" continue and Polish agreement in principle, contingent Battle Act revision, be made condition any further PL - 480 agreement.
NB: Pertinent Embassy views US trade and aid policy were set forth at length in despatches 40, July 29, 1960, and 344, January 13, 1961, as well as draft ``Guidelines US Policy and Operations Concerning Poland", August 14, 1961./2/
/2/Despatch 40 transmitted the Embassy's review of U.S. policy on Polish economic management. (Ibid., 411.4841/7 - 1960) Despatch 344 examined U.S. policy toward Poland since 1957. (Ibid., 611.48/1 - 1361) ``Guidelines for Policy and Operations in Poland" is ibid., S/P Files: Lot 69 D 121, Poland.
Magistretti
45. Paper Prepared in the Department of State
//Source: Department of State, S/S - NSC Files: Lot 70 D 265, NSC Meeting of October 13, 1961. Secret. Attached to a memorandum from Battle to Bundy, October 12. The paper was discussed at the 491st meeting of the National Security Council on October 13; see Document 46. For additional documentation on the subject of export licenses for Yugoslavia, see Documents 102 ff.
Washington, October 11, 1961.
REVIEW OF POLICY FACTORS CONCERNING LICENSING OF EXPORTS TO YUGOSLAVIA AND POLAND
Problem: The President decided at the White House meeting on September 22/1/ that export licenses for shipments to Yugoslavia and Poland should not be issued pending review of this question. Such licenses have been withheld since September 18.
/1/No record of this meeting has been found.
Prior to September 18 our treatment of exports to Yugoslavia and Poland was derived from our general policy toward those countries, based upon a careful and continuing analysis of our long range interests and objectives. To make a determination on the future licensing of exports to Yugoslavia and Poland, it therefore seems essential to re-examine the validity of our general policies toward those countries. A re-examination of our general policies is also desirable in order to provide future guidelines for other aspects of US relations with these two countries, including the daily conduct of diplomatic contacts, aid programs, trade policies, technical assistance activities, cultural exchange arrangements, etc.
It is important at the outset to emphasize the profound differences between Poland and Yugoslavia. Their internal political and social structures are different; their general international postures are different; their relations with the US are different. Accordingly, the treatment they have received from the US has differed considerably. The principal point of similarity between the two countries is their mutual dedication to the general philosophy of Marxism, but even this philosophy has been interpreted and applied in different ways.
In terms of US interests and objectives, there is no more validity in lumping Poland with Yugoslavia than there would be in lumping Tunisia with Ghana. Therefore, while the need for re-examining our policies is equally urgent for both countries, it is essential that each country be considered separately.
I. Yugoslavia
A. General Policies
Up to the present time, US policy toward Yugoslavia has been based on the following premises:
1. Yugoslavia, while subject to a Communist dictatorship, is not a part of the Sino-Soviet bloc. In 1948 the Yugoslav Government, under Tito's leadership, broke away from Soviet control and the international Communist movement. Since that time Yugoslavia has shown a vigorous determination to preserve its national identity and freedom from outside domination.
2. To a considerable extent, Yugoslavia has opened itself to Western ideas and institutions. It has also evolved an economic and political system which differs substantially from that of the Soviet Union. Yugo-slavia's economy has undergone a process of decentralization with definite elements of competition and individual incentive. In this connection, it is important to note that Yugoslavia has achieved a rate of economic growth greater than is found anywhere in the Soviet bloc.
3. Yugoslavia's independence of Soviet control has been emphasized by Yugoslavia's participation as member or observer in certain international organizations in which the Soviet bloc does not participate and which, in some respects, are antithetical to Soviet ambitions. These include the GATT, the European Productivity Agency, the OEEC and the new OECD. Yugoslavia is also a member of the International Convention for the Protection of Industrial Property, which protects US patent and trade mark rights in Yugoslavia. While the US has no formal copyright relations with Yugoslavia, few serious copyright problems have actually arisen.
4. Within the context of the ``cold war", Yugoslavia is a neutral country and usually behaves as such. It frequently takes positions on international issues that are opposed to US attitudes and interests, but this is equally true of other neutral nations. In the UN, for example, Yugo-slavia's voting record corresponds more closely with that of India than with that of the Soviet bloc.
5. US trade with Yugoslavia, while moderate in volume, nevertheless serves US economic interests. Our overall balance of trade with Yugoslavia is decidedly favorable, and Yugoslavia is a significant market for US agricultural surpluses.
6. The US has a definite interest in maintaining Yugoslav freedom from Soviet control. In addition to our obvious desire to prevent the expansion of Soviet domination over Yugoslavia itself, the continued independence of Yugoslavia affords certain special advantages in our world-wide resistance to Sino-Soviet imperialism. It has profoundly disturbed the political and ideological unity of the international Communist movement. It has definitely encouraged nationalist, anti-Soviet tendencies among the populations of the Soviet-dominated states of Eastern Europe. The fierce Soviet and Chinese attacks on Yugoslav ``revisionism" and ``deviationism" have vividly reminded Marxist sympathizers in all parts of the world that the Sino-Soviet bloc is not satisfied with a mere triumph of ideological principles, but demands direct subservience to the bloc.
On the basis of the foregoing considerations, the US has maintained a relationship with Yugoslavia generally similar to that maintained with other neutral nations. We have pursued friendly and frank diplomatic contacts, have conducted extensive information activities in Yugoslavia and have carried on a broad exchange program. Yugoslav requests for economic and technical assistance have been considered on their merits, and trade with Yugoslavia has been conducted as with other friendly and neutral countries.
The US Government had reason for keen disappointment concerning Tito's speech and the general role of Yugoslavia at the recent Belgrade Conference. We have already expressed to the Yugoslav Minister of Foreign Affairs and to the Yugoslav Ambassador here, as well as in writing to the Yugoslav Government in Belgrade, our disappointment and displeasure over the Yugoslav performance. However, as Ambassador Kennan has pointed out, we would be merely sowing misunderstanding if we took action which would imply that the Belgrade Conference has created a wholly new and unprecedented situation.
It seems clear that our diplomatic pressures have already produced certain effects. Foreign Minister Popovic's recent speech at the UN clearly indicates a Yugoslav desire to redress the balance and to reaffirm Yugoslavia's status as a truly non-aligned country.
Despite the frequent differences that will inevitably arise between the US and Yugoslavia, it is important that the US never lose sight of its own basic interests. It is important to the US that Yugoslavia remain independent, that it continue to present to the satellite states the magnetic picture of a successful alternative to bloc membership under Soviet domination and that it continue to be a disruptive element in the international Communist movement.
The Department is well aware of the domestic implications of any US policy toward Yugoslavia. The fact that Yugoslavia has adopted the Communist ideology inevitably creates strong domestic pressures against amicable US-Yugoslav relations. These pressures tend to increase when the Yugoslav Government makes offensive pronouncements. Nevertheless, affirmative US policies toward Yugoslavia have, over the years, been supported consistently by informed public opinion and by the Congress in a long series of legislative actions.
The Department believes that the fundamental interests of the US are served by continuing to recognize and support the independence of Yugoslavia from Sino-Soviet domination. Continuity is obviously a vital ingredient in the success of such a policy. We cannot succeed if we permit our basic premises and goals to fluctuate with the constantly shifting winds of international events.
B. Special Problems
In the practical application of our general policies toward Yugoslavia, it is necessary to give attention to such problems as (a) trade relationships, (b) economic grants and loans, (c) technical assistance, (d) travel, (e) cultural exchanges, etc. At the present time, however, the only issue which requires an urgent decision by the US is the recent suspension of export licensing.
The US already has certain agreements with Yugoslavia on technical assistance. Any extension of these agreements will require review and possible revision. Yugoslavia has also filed a new application for one million tons of grain under the PL 480 Program, but this application is very recent and has not yet even been discussed with the Yugoslavs. It may also be desirable to review certain other specific aspects of our relations with Yugoslavia. However, with the single exception of export controls, all these matters can be considered with relative leisure.
The Department believes that the recent suspension of export licenses to Yugoslavia is inconsistent with US interests for the following reasons:
1. The suspension of licenses implies that the US is lumping Yugoslavia with the remainder of the Soviet bloc, which is not only unsound on factual grounds, but which also has a political significance far out of proportion to its economic effects.
2. The economic significance of withholding individually validated licenses for exports to Yugoslavia is limited. About 92 per cent of the items controlled by the Department of Commerce can be exported to Yugoslavia without individually validated licenses, and over 80 per cent of US-Yugoslav trade is in this category. For the remaining 8 per cent of controlled items, licenses have generally been issued subject to Yugoslav assurances concerning transfer to third countries. We have no evidence that the Yugoslavs have ever failed to honor these assurances, with one exception in 1957, when the Yugoslavs admitted a mistake in permitting the diversion of a borax shipment.
3. Virtually all the items withheld from Yugoslavia by our recent suspension of licenses can be obtained without difficulty from Western Europe, Japan or elsewhere in the Free World. Thus, even if it were assumed that the export of certain items to Yugoslavia might somehow threaten our security interests (a highly dubious assumption) the suspension of licenses would accomplish little or nothing in protecting our security.
4. The only substantial effect of withholding licenses for exports to Yugoslavia would be political. A continued suspension would be interpreted to mean that the US has altered its basic concept of Yugoslavia as an independent nation, or else would be interpreted as an indication that the US is reacting toward Yugoslav behavior at the Belgrade conference in an abrupt and vindicative manner. In either case, the basic interests of the US would suffer, both in terms of our relations with the Yugoslavs themselves, and in terms of the attitudes of other nations toward the US. In the words of Ambassador Kennan, ``It is one thing to speak of modifying previous levels and nature of aid programs; it is another thing to deprive the Yugoslavs of normal opportunities for trade with the US . . . Drastic and punitive measures affecting trade as well as aid would only silence our friends, vindicate anti-Western extremists . . . and cut off more hopeful possibilities. So final would this be in its effect on possibilities for my own usefulness here that I would hope the Department would give me an opportunity for personal consultation before taking steps of such gravity."/2/
/2/Ellipses in the source text.
C. Recommendations:
1. That the US reaffirm the basic principles of its policy toward Yugoslavia.
2. That the current suspension of export licenses for shipments to Yugoslavia be removed, and that the US revert to the policies and practices previously in effect, under which Yugoslavia received treatment comparable to that accorded other neutral nations.
3. That our policies toward Yugoslavia with respect to aid, technical assistance, development credits, etc., be carefully reexamined, with attention both to our long-range objectives in Yugoslavia and to our immediate tactical relations. Ambassador Kennan, for example, has recommended that we fulfill existing technical assistance contracts but negotiate no new ones; that we continue to make developmental loans on a project-by-project basis; that the work of voluntary relief agencies be re-examined; and that we grant only about 40 to 50 per cent of outstanding Yugoslav requests for wheat, and considerably less in other commodities. All these recommendations should be carefully reviewed here in Washington, but there is no great urgency involved.
II. Poland
A. General Policies
Poland, unlike Yugoslavia, is clearly a member of the Soviet bloc. It is bound to the USSR not only through such formal instrumentalities as the Warsaw Pact, but also because of its exposed geographic position, its heavy economic dependence upon the Soviet Union, its desire for support against fears of a resurgent Germany, etc. Even more important is the fact that Soviet troops are still present in Poland. The Polish Government, in any ``show-down" situation, would have no genuine alternative but to submit to the Soviet will. The Polish position on international issues is rarely distinguishable from that of the Soviet Union itself. In brief, Poland is under heavy Soviet influence and US policies must fully take account of this fact.
On the other hand, it is equally important to recognize that Poland is by all odds the softest spot in the Soviet system. It differs from the other bloc members in a number of significant respects. First, since the establishment of the Gomulka regime in 1956, the Polish Government has enjoyed a measure of independence which, while limited, is nevertheless unique within the bloc. The people of Poland have a long-standing antagonism toward Russia and basic orientation toward Western civilization. Only a small part of Polish agricultural land has been collectivized. Essential freedom of worship exists in Poland, including the teaching of religion to children by the clergy and the operation of a university and seminaries by the Catholic Church. The Polish Government permits a diversity of expression in the arts which is unmatched elsewhere in the Soviet bloc, and intellectual activity is fairly vigorous. The Polish Government has also been more restrained in the exercise of police power, as evidenced by the relative absence of political arrests and greater freedom of movement within the country. Finally, the Polish regime permits more extensive and active contacts with the West than are permitted by other satellite states. This is true in terms of scientific and cultural contacts, tourist travel and the emigration of large numbers of Poles to various Western countries.
Under the Gomulka regime, there has also developed a considerable expansion of relations with the US. US officials in Poland are able to maintain and develop broader contacts, both with officials and with private citizens. US consular officers are able to carry on their activities with considerable freedom and on a much larger scale than is possible in other bloc countries, including services on behalf of American citizens. US volunteer agencies (CARE, Church World Service, etc.) are able to administer food distribution programs which include full identification of the source of the distributed goods. The US has been able to maintain a USIA-type program in Poland, including the establishment of a reading room open to the public, the distribution of the Information Bulletin, the publication of a monthly magazine and the circulation of a considerable volume of American books, films, etc. The US has formal treaty relations with Poland covering patents, trademarks and copyrights, and there has been no evidence of Polish ``piracy" with respect to any of these rights. VOA broadcasts are not jammed in Poland. Finally, the US has been able to develop a far more extensive exchange program with Poland than with any satellite country.
Total US exports to Poland are similar in dollar volume to US exports to Yugoslavia. The balance of trade is distinctly favorable to the US, and the US retains the right to demand gold or hard currency for its exports to Poland. Surplus agricultural commodities represent a sizable proportion of Polish imports from the US. Thus, the US itself derives a significant economic advantage from its trade relations with Poland.
In developing future US policies toward Poland, it would be erroneous and dangerous to base such policies on the illusion that Poland is likely to be detached from the bloc in the immediate future. On the other hand, in view of the circumstances described above, it is apparent that Poland enjoys a significant measure of autonomy, particularly in the pursuit of internal policies, which the rest of the bloc does not possess in any comparable degree.
In essence, two courses of action are open to the US. The first is simply to write off Poland, along with all other countries within the Soviet bloc, as a ``lost cause" and to concentrate our energies solely on maintaining a defensive posture against the further expansion of Sino-Soviet influence. The second alternative is to take such steps as are available and practical to ``carry the war to the enemy"--specifically, to seize all reasonable opportunities to increase Western influence and weaken Soviet influence in Poland over an extended period of years, with the ultimate objective of helping Poland to become a completely independent nation.
The second alternative necessarily implies the application of special policies to Poland in such fields as trade, commercial credits, economic and technical assistance, exchanges of persons, etc. The application of these special policies inevitably involves uncertainties, since our ultimate goals can be achieved, at best, only over a long period of years.
In brief, the second alternative is a calculated gamble. However, the first alternative is wholly defeatist. The first alternative would imply US acceptance of the thesis that a Communist triumph in practically any country must be regarded as permanent, and that the continuing struggle between the Sino-Soviet empire and the Free World must therefore be waged exclusively upon the territory of the latter.
For the reasons indicated, the Department has accorded Poland a considerable measure of special treatment since 1956. This policy was never expected to produce any sudden or dramatic results. On the other hand, this policy has unquestionably brought some visible gains. It has helped to preserve the changes distinguishing Poland from the other bloc states, to keep the door open to wider American access to the Polish people and to maintain the intrinsic Western orientation of the great mass of the Poles. This policy also continues to provide a lever by which the US can hope to influence the future destiny of Poland and to moderate the actions of the entire Soviet bloc. Because of these benefits, our policy has received widespread support among interested domestic groups, such as the Polish American Congress.
B. Special Problems
The application of our general policies toward Poland to the specific areas of trade, aid, exchanges of persons, etc., obviously requires greater tactical flexibility than is the case with Yugoslavia. This is true because our immediate objectives are more limited, because our contacts with the Poles are more restricted, because the risks of liberal treatment are greater and because Poland, as a member of the bloc is necessarily involved in US decisions affecting the bloc as a whole, such as the Berlin crisis.
At the present time, there are two issues in our relations with Poland that require urgent decision. The first involves the willingness of the US to conclude an agreement already tentatively reached with Poland for the shipment of 86 million dollars worth of grain under the PL 480 program. The terms of this tentative agreement provide that Poland will pay for this grain in local currency, which the US will have the option of either using within Poland or, at the end of a 10-year period, converting into dollars or gold. (These terms are similar to those which have been applied to past PL 480 transactions with Poland.)
While naturally Poland is anxious to conclude this agreement, the US has thus far hesitated to do so because of the Berlin crisis.
The second problem requiring urgent decision involves the field of export controls, and specifically the recent suspension of licenses for shipments to Poland. In past years, the policy of giving special treatment to Poland has been applied to the field of export controls, as well as to other activities and relationships. The preferential treatment given Poland has been limited, but it is perhaps the basic explanation of the fact that Poland, as compared with other bloc countries, accords the US special treatment in overall relations.
Our preferential treatment of Poland can best be illustrated by comparing the export licensing policy applicable to Poland with the licensing policy which has been applied to the remainder of the Soviet bloc. In the past, about 10 per cent of the items controlled by the Department of Commerce could be exported to the Soviet bloc under general license. Another 80 per cent required individually validated licenses, which were usually granted upon application. The remaining 10 per cent, consisting of items on the Positive List and the GRO Exception List, likewise required individually validated licenses, but applications for these were usually denied to other bloc countries.
In the case of Poland, about 90 per cent of the items controlled by the Department of Commerce could be exported under general license. The remaining 10 per cent, consisting of items on the Positive List and the Polish GRO Exception List, required individually validated licenses. Licenses for these items were sometimes granted to Poland if they were determined to be ``reasonable and necessary to the Polish civilian economy".
The recent decision to suspend export licenses for shipments to Poland and Yugoslavia still leaves Poland in a better position than the remainder of the Soviet bloc with respect to general licenses, but actually gives the other bloc countries somewhat better treatment than is given to Poland in the issuance of individual licenses, since action is at least permissible on applications from the former. This is wholly incongruous with the general US policy toward Poland.
Since August 25, 1961, there has been a more rigorous application of criteria in our controls over exports to Eastern Europe as a whole. The Department concurs in this tightening of export controls, which apply to Poland along with the remainder of the Soviet bloc. Nevertheless, the Department strongly believes that the general freeze on individual licenses for exports to Poland should be lifted, and that we should revert to the previous policy of according preferential treatment to Poland, for the following reasons:
1. The maintenance of preferential treatment for Poland in granting US export licenses is an extremely important element of our overall policy toward Poland. The termination of this preferential consideration would be interpreted by the Poles, and by various allied and neutral nations, as an indication of a basic change in the US policy of distinguishing between Poland and the remainder of the bloc, and might well be interpreted by the Polish people as evidence of a US decision to ``write off" Poland as a lost cause. This would inevitably strengthen the hard-line, pro-Soviet Communists in the Gomulka regime, would have a profoundly discouraging impact upon Western-minded Poles, and would tend to nullify the gains that we have made in our relations with Poland since 1957.
2. The current suspension of individually validated licenses for exports to Poland has a relatively minor effect upon the total volume of US exports to Poland. Nor is it likely to have any significant effect upon US strategic interests. As Embassy Warsaw points out, refusal of licenses will have no economic result except to divert Polish hard currency earnings to other Western suppliers. Here again, as is true in the case of Yugoslavia, the principal impact is political and psychological.
3. In one sense, the present freeze tends to discriminate against Poland in relation to the remainder of the bloc. We have no basis whatever for justifying such discrimination, either to the American people, to the Poles or to other nations of the world.
4. Within the framework of our general policy toward Poland, it is recognized that tactical situations may arise which will make it desirable for the US Government to exert pressures upon Poland. It is also recognized that the general field of export controls affords an opportunity for the exertion of such pressures. However, it seems obvious that the US must give the most careful consideration to any measures of this kind before putting them into effect. We must have a clear understanding of our objectives in exerting pressure, we must choose the particular measures most likely to be effective, we must choose the proper time and circumstances and, finally, we must always try to maintain a balance between our short-term and long-term objectives.
Leaving aside all other considerations, it seems obvious that the present moment is the worst possible time to exert special pressures against Poland in the field of export controls. In the near future, we may be required to take stern measures against the Soviet bloc as a whole, including Poland, because of the Berlin crisis. Western contingency planning for economic countermeasures against the Soviet bloc is already underway. However, there are three vital elements to be considered in planning these countermeasures. The first is that the economic countermeasures should not be applied unilaterally by the US but should be applied by the NATO countries as a whole. Second is that such economic countermeasures should be applied to the entire Soviet bloc, without distinction among individual members of the bloc. The third is that these economic countermeasures should be applied at a time when they are likely to produce a maximum impact upon the Soviet bloc in relation to the Berlin crisis.
The withholding of licenses for exports to Poland represents a unilateral move by the US, prematurely timed and directed against a particular country. The continued withholding of these licenses would thus diminish the force of properly-timed, concerted Western countermeas-ures, and would also severely complicate the difficult problem of obtaining an agreement among the NATO countries on the application of such countermeasures. In brief, we seem to be bringing pressure against the wrong country at the wrong time in the wrong way.
C. Recommendations
1. That the general US policy of seeking to maintain a ``special relationship" with Poland be reaffirmed. This implies a measure of preferential treatment for Poland as compared with other bloc countries.
2. That the current suspension of export licenses for shipments to Poland be removed. The US should follow the course agreed to on August 25, 1961, of applying more rigorously the criteria for granting individual licenses, in accordance with the general tightening of controls over exports to the Soviet bloc as a whole. However, Poland should continue to receive the same degree of preferential treatment over other bloc members that it has been accorded in past years, unless and until the Berlin crisis warrants a general economic blockade against the entire Soviet bloc.
3. That no decision be made on the conclusion of the pending PL 480 agreement with Poland until the Department has had an opportunity to examine more carefully the possible consequences of this agreement, both in terms of the fluid Berlin situation and in terms of selecting the most effective tactics in the application of our general policies toward Poland.
4. That other aspects of our relations with Poland, especially those involving preferential treatment, be carefully reviewed during the next few months, taking full account of the recent recommendations by Embassy Warsaw.
46. National Security Council Record of Action No. 2439
//Source: Kennedy Library, National Security Files, Countries Series, Yugoslavia. Secret. The decisions were taken during the 491st meeting of the NSC on October 13.
Washington, undated.
POLICY TOWARD YUGOSLAVIA AND POLAND (``Review of Policy Factors Concerning Licensing of Exports to Yugoslavia and Poland")/1/
/1/Document 45.
a. After discussing the paper entitled, ``Review of Policy Factors Concerning Licensing of Exports to Yugoslavia and Poland", agreed:
(1) To remove the current suspension of export licenses for shipments to Yugoslavia and Poland, and
(2) To revert to previous practices, including the careful screening of all export licenses issued.
b. Noted the President's request that the Secretary of State review all types of economic assistance being extended to Yugoslavia and Poland and to present to the Council recommendations with respect to future assistance. These recommendations should rest on a review and restatement of U.S. policy toward each country.
47. Memorandum From Secretary of State Rusk to President Kennedy
//Source: Kennedy Library, National Security Files, Country Files, Poland. Confidential.
Washington, November 15, 1961.
SUBJECT
Pending PL 480 Agreement with Poland
Problem
At the NSC Meeting on October 13 you requested that I review assistance programs to Poland and make recommendations to the Council on the basis of a review and restatement of US policy toward that country./1/ The only assistance program under consideration at this time is a pending PL 480 agreement.
/1/See Document 46.
In view of the limited scope of the assistance problem, the pending status of the agreement after negotiations with the Poles since last June and the need to reach a decision at an early date the Department believes that this matter might well be settled without bringing it before an NSC meeting.
Discussion
Background of PL 480 Negotiations. PL 480 agreements with Poland have been concluded annually between 1957 and 1960 for a total of $365 million. In negotiations this summer most of the details were worked out for an agreement totalling $86.3 million and including the sale of 500,000 tons of wheat, 100,000 tons of barley and lesser amounts of other surplus commodities. These negotiations were suspended and the Polish Ambassador informed on September 1 that, in view of the current international situation, we were not prepared to sign the agreement at that time. We told him that we would review the situation during the following month to see if it would develop in a way which would make conclusion of the agreement possible.
In the following weeks the Poles, while informally indicating that they understood our having to delay signature of the agreement, pointed out the serious difficulty which an extended delay would cause them in seeking to satisfy their grain requirements for the coming year. They have emphasized that, even with increased deliveries from the USSR and about 500,000 tons of grain purchased for hard currencies from Canada, Finland, Switzerland and West Germany, they will have a substantial short-fall. They also point out that, in connection with their economic planning for 1962, the effects of failure to work out a solution to their grain requirements in the near future would be serious, and might include political consequences which could adversely affect the independent status of the Polish farmer as well as US-Polish relations.
Because of the Berlin crisis and domestic discussion of economic relations with the Soviet bloc it was decided to delay action on the PL 480 agreement and to review economic relations with Communist countries. In informing the Poles of the delay in conclusion of the PL 480 agreement, we had in mind the possibility that our action might encourage them to seek to exercise a beneficial influence with Moscow in connection with the Berlin crisis. There is no evidence available to indicate what effect it has actually had. We are satisfied, however, that whatever effect may have been achieved in this direction cannot be sustained by further delay. Also, we have already substantially exceeded the period of delay indicated to the Poles.
Significance of the Polish Situation. The Gomulka regime came to power in 1956 in the face of dramatic pressure by the Polish people for liberalization and an end to the unhappy period through which Poland had passed during the previous decade. While Gomulka was able to restore order and preserve the system of Communist rule, his regime has been characterized by major divergencies from the pattern of the rest of the Soviet bloc which affect not only the situation within Poland but its role in the bloc and in the world.
The measure of independence which Gomulka won in 1956 has been reflected in domestic policies which are unique in three important respects:
(1) Agricultural land was returned to the peasants. Except for 13% of arable land held in state farms (most of which is in formerly German areas), only 1% of Polish agricultural land is collectivized. The remaining 86% is farmed by private farmers to whom Gomulka has stated that they will never again be forced into collectives.
(2) An understanding was reached with the Catholic Church under which essential freedom of worship has been permitted, including the teaching of religion to children by the clergy and the operation of a university and seminaries by the church. While there have been stresses in the relationship between the regime and the church, these freedoms continue to exist.
(3) The area of civil freedom has been expanded. The power of the police has been significantly restrained, resulting in a marked relaxation of the atmosphere of fear and suspicion which characterizes life in the Soviet bloc. Diversity in the arts and intellectual life is permitted to a degree unmatched in the bloc. The Polish theatre, the graphic arts and literature all reflect the existence of an area of self-expression which, while not extending to open criticism of the regime, is not fettered by the requirements of ``socialist realism". Travel within Poland and beyond its borders is freer than in any other Eastern European country.
Since 1956, Poland has also played a special role in the international sphere. Within the Soviet bloc, the very existence of a Communist country in which unorthodox domestic policies are pursued inevitably exerts an influence in other bloc countries which complicates regime efforts at maintaining orthodoxy as well as the general effort to foster homogeneity in the bloc. Beyond the bloc, Poland has developed a pattern of relationships with the West which is unique. This has made possible contact with the West and influence from the West to such an extent as inevitably to affect the situation within Poland.
United States Activities in Poland. The development of bilateral relations with Poland since 1956 has made possible a considerable expansion of US activities there. Officers of the Embassy in Warsaw as well as visiting US officials have been able to maintain broad contact with Polish officials and other citizens as well as to move freely about the country in performance of their functions. Embassy officers are able to represent the interests of American citizens to a degree and through means which are not possible elsewhere in the Soviet bloc. US voluntary agencies are able to administer food distribution programs which include full identification of the source of the distributed goods and delivery directly to the recipient. VOA programs are not jammed in Poland. We have been able to maintain a modest USIA-type program, including circulation of an official US magazine and an International Media Guarantee program, of $1.2 million per year. Finally, we have been able to develop an exchange program involving both the US Government and a number of American foundations and other private sponsors which is considerably larger and less fettered by government controls than any other in the orbit states of Eastern Europe. We have been able to contract for various types of agricultural, medical and vocational rehabilitation research programs, financed out of zloty proceeds from PL 480 sales.
The Role of US Assistance to Poland. The deliveries of foodstuffs have contributed significantly to the total supply of these essential commodities. Deliveries of cotton have had a noticeable impact upon the important Polish textile industry and upon the supply of textiles and clothing in Poland. The Polish people are aware of the nature and importance of US aid which, therefore, serves our purpose of demonstrating our interest in their welfare.
More important, the development of the US activities and programs in Poland described above has gone hand in hand with the program of US economic assistance which began in 1957. There can be little doubt that PL 480 deliveries including the prospects for their continuity have had an important influence on the receptivity of the Polish Government to other US Government activities in Poland.
Since 1957 the US has satisfied a significant portion of Polish grain requirements, having provided a total of almost 4 million tons of wheat and other grains. It is not in our view an exaggeration to state that our deliveries of these commodities have constituted an underpinning for the continuation of Poland's essentially private agricultural system.
Effect of Further Delay in Concluding PL 480 Agreement. We believe that a further delay in concluding a PL 480 agreement will produce a reaction to the detriment of US programs and thus of our influence in Poland. Our policy toward Poland since 1957 has been delicately adjusted to a complex situation. If it is to be successful in the long run there must be continuity in our actions so that those in the Polish regime who take the risk of advocating more extensive relations with the US will have ground for doing so. There is considerable indication that the Polish leadership includes, besides those individuals who support the policy of active relations with the US and other Western countries, others who oppose these and who urge more orthodox domestic policies and closer ties with the Soviets. The latter would very likely exploit a break in the continuity of the PL 480 program in an effort to restrict the scope of US-Polish relations and to bring about a retrogression in domestic policies, particularly as regards the status of the peasantry.
There are some signs that the delay in concluding a PL 480 agreement has already had effects on our relations with Poland. The Polish Government has, for example, postponed dedication of the American Children's Hospital in Krakow. We have also learned that the Polish Embassy in Washington has received instructions to begin the liquidation of the Polish commercial mission in the US. The latter action is said to result from the fact that the mission's presence is not justified by its present workload.
We have been informed by a number of Polish officials in Warsaw and Washington that some solution to the problem of their grain requirements must be found urgently. They have pointed out in this connection that economic planning for 1962 must be completed by the end of November. It is probable that in the absence of an indication of continued grain deliveries under PL 480 that the Polish Government will resort to the reintroduction of certain coercive measures to obtain grain which is being withheld by the peasants. The implications of such action for the continuation of Polish agricultural policy are apparent.
Conclusion
It is in the light of the situation described above that we must now consider whether to continue to withhold the PL 480 agreement or to take some action to conclude an agreement. The decision should, we believe, take into account factors affecting both the international situation and our relations with and policy toward Poland. We do not believe that developments since September with regard to the international situation are such as to justify conclusion at this time of the full agreement negotiated last summer. We do believe, however, that our purposes would best be met by the conclusion as soon as possible of an agreement of approximately half the value of the $86 million agreement negotiated last summer. Signature of this partial agreement could be coupled with a statement that we would be prepared, if conditions permit, to consider other Polish needs under PL 480 at a later time.
Such action, while helping to meet Poland's urgent need for foodstuffs, would, we believe, satisfy our purposes in avoiding the deterioration of our relations with Poland. It would, at the same time, clearly indicate that we continue to regard the international situation, as it affects our relations, as not in a condition which would justify conclusion of the full agreement originally negotiated.
The most urgent Polish need at present is for grains. This then should constitute the basic component of the partial agreement. The Department of Agriculture, however, for domestic marketing considerations which it feels are highly important, desires to program also the vegetable oils included in the draft agreement previously negotiated. It is satisfied, moreover, that the vegetable oils can be justified as a necessary foodstuff. Although we do not believe inclusion of the vegetable oils is necessary for foreign policy reasons, we concur, for the reasons stated by the Department of Agriculture, that they be included in the partial agreement.
Recommendation
1. That you authorize conclusion of a PL 480 agreement with Poland as soon as possible in the amount of about $45 million.
2. That the Polish government be informed that consideration will be given at a later time to additional Polish requirements for PL 480 commodities in the light of the situation as it exists at the time.
Dean Rusk
48. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/11 - 2161. Confidential. Drafted by Wortzel; cleared by EE, ALD, EUR/EX, FN and the Treasury Department for paragraph 1, and CU for paragraph 2; and approved by Vedeler.
Washington, November 21, 1961, 7:26 p.m.
770. Deptel 763./1/ Understand Embassy already aware provisions Agriculture Act 1961 which prohibit PL 480 sales at exchange rate less favorable than US Treasury disbursing rate. Poles here have stated categorically that for political reasons including implications re sovereignty Polish Government cannot accept situation in which another govt requires it to establish new official exchange rate. Argue also that after years of inflation and confusion Poland established present rate which it chose not to alter even in face Soviet pressure connection recent revaluation ruble and which determined to maintain. Dept believes this position firm and therefore likely that termination accommodation rate unavoidable if PL 480 agreement to be concluded. Dept aware impact termination accommodation rate and now considering steps including necessary adjustment allowances and establishment post allowance effective from date of rate change.
/1/Telegram 763, November 20, informed the Embassy that the Department would indicate willingness to resume P.L. 480 negotiations to the Polish Ambassador. (Ibid., 611.4841/11 - 2061)
Re Embtel 833/2/ Dept plans seek include necessary authority zloty use in agreement. Will also seek obtain conversion for per diem and expense connection FAS program.
/2/Telegram 833, November 10, reported Embassy discussions of a Polish proposal for community schools. (Ibid., 611.4841/11 - 1061)
Dept has obtained Polish Ambassador's assurance Poles will not disclose PL 480 negotiations prior conclusion agreement./3/
/3/In telegram 901 from Warsaw, November 24, the Embassy reported its concern about Polish ``sensitivity" on the exchange rate issue and suggested that the Polish position was subject to modification. (Ibid., 611.4841/11 - 2461)
Rusk
49. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/11 - 2461. Confidential; Priority. Drafted by Wortzel; cleared by EE, FN, Blumenthal, AID, and the Department of Agriculture; and approved by Vedeler.
Washington, November 29, 1961, 12:15 p.m.
796. Embtel 901./1/ Dept has given thorough consideration intent and implications Section 201 Agriculture Act/2/ as affecting official activities and personnel in context pending PL 480 agreement. In negotiations we have repeatedly stressed importance Polish concession and used arguments including points mentioned reftel. Issue at impasse upon suspension negotiations August. In numerous conversations since then Poles including Ambassador who authoritative this subject have expressed concern that this issue appeared to prevent agreement but repeated that this matter of principle and that Warsaw inflexible for reasons stated Deptel 770./3/ At meeting November 22 Dept insisted Poles ask Warsaw reconsider position with view finding solution. At meeting November 27 Poles said that reply received to effect that 24 - 1 rate absolutely not negotiable.
/1/See footnote 3, Document 48.
/2/For text of Section 201 of P.L. 480, see 68 Stat. 457.
/3/Document 48.
Would appreciate Embassy's elaboration basis doubt that Polish position final.
Re request reftel that signature agreement be delayed, Dept sees no purpose delay if as stated reftel rate change unavoidable.
Dept understands Embassy concern effect rate change on personal and official expenditures. As pointed out Deptel 770 and Vedeler letter actions under consideration designed deal with problem. Details to follow./4/
/4/In telegram 934 from Warsaw, November 30, the Embassy responded that it believed the Poles would give ground on the exchange rate issue because of the extreme importance of U.S. imports to the Polish economy and urged delay in the signature of the agreement until Ambassador Beam had arrived in Washington to present his views. (Department of State, Central Files, 611.4841/11 - 3061)
Rusk
50. Memorandum of Conversation
//Source: Department of State, Polish Desk Files: Lot 67 D 238, PL 480 General. Confidential. Ambassador Beam dictated the memorandum of conversation in Washington on December 2.
Warsaw, November 29, 1961.
SUBJECT
General US-Polish Relations
PARTICIPANTS
Jozef Cyrankiewicz, Polish Prime Minister
Jacob D. Beam, United States Ambassador to Poland
Interpreter from the Council of Ministers
(On November 24 I mentioned to the Foreign Office Chief of Protocol that I would like to hold myself at the disposal of the Prime Minister to make a farewell call and asked that he be informed accordingly. Hearing nothing further, I mentioned to Foreign Trade Minister Trampczynski in my call on him the day before my departure (November 29) that I regretted I had not been able to see the Prime Minister and asked him to transmit my farewell greetings and regards to Mr. Cyrankiewicz. I said I was especially sorry to have missed the Prime Minister since our President had received Polish Ambassador Spasowski on his departure.
At the Foreign Office luncheon given for me the same day, the Protocol Chief and the Head of the American Desk were called away for a long telephone conversation. On their return they asked me whether I would be free to call on the Prime Minister at 4:30 that afternoon. I replied I would be honored to do so. My ensuing talk with Cyrankiewicz reported below lasted just over an hour.)
After an opening exchange of amenities, I commented US-Polish relations were good but required further improvement, especially after the events of the current year. It was our feeling Poland was perhaps apt to take its relations with the US too much for granted and was not fully aware of our problems.
We had been trying to help Poland and the Polish people but this had recently proved difficult. Certain statements and press articles had been published which affronted the dignity of the US and had provoked a vivid reaction in Congress and among the American people. Furthermore our economic programs did not seem to be appreciated and it had been noted in Washington that no publicity whatsoever had been given to the extent of US economic assistance to Poland. A goodwill visit of some of our Congressmen to take part in the cornerstone-laying ceremonies for the Krakow Hospital had been cancelled from the Polish side and this step was resented in influential Congressional circles. I said I was hopeful that some relaxation of international tensions might soon occur and that we would be able to go ahead with some of our plans for Poland. I sincerely trusted the Polish Government would take advantage of these possibly favorable opportunities and would devote closer attention to US-Polish relations and to meeting our needs for their maintenance and improvement.
The Prime Minister replied he would be happy to comment on some of the difficulties which arose on the Polish side. President Eisenhower had stated US assistance was being given to break Poland away from its Soviet ally. This objective was unacceptable. As to the Krakow visit, the Polish Government understood that some Congressmen were to be included who were unfriendly to Poland and who hoped to exploit their trip to make hostile propaganda at a time when international relations were already tense. An economic program for this year had earlier been discussed with the US but had been abruptly cancelled because of Poland's supposed misdeeds over Berlin. Such political pressure was unacceptable. As to publicity, the Government had sent its Deputy Prime Minister to Krakow with me to inaugurate the new galvanizing line at Nova Huts. The Prime Minister was happy to learn that discussions had been reopened in Washington on a curtailed economic program for this year but two principal obstacles had to be overcome. Because of the break-off of the previous talks, Poland had been forced to assign large quantities of foreign exchange to the purchase of wheat abroad. Now it was being required by the US to buy 200,000 tons with its own dollar resources. The money could not be provided in the established plan. Furthermore Poland was being asked to alter its exchange rate in accounting for the local currency deposits. This simply could not be done.
I replied as follows. Secretary Dulles in October 1957 had made it clear the US did not wish Poland as a military ally and Poland was free to make such arrangements for its security as it found necessary, although of course we hoped it would be able to act of its own free will. Any other idea would be unrealistic.
With respect to the Krakow visit by our Congressmen, this had been proposed as a goodwill gesture which might ease relations by concentrating attention on a common humanitarian objective. It had been my experience that unfriendly persons usually left Poland with a better feeling after witnessing Polish achievements and experiencing its hospitality. It was still regrettable this opportunity had not been seized by the Polish Government but I would do my best to alleviate the misunderstanding on my return.
With further regard to the Nova Huts ceremony, I reiterated my appreciation for the Deputy Prime Minister's participation but observed that, as had already been mentioned in Washington, no mention had been made of those portions of my speech reporting that the total of our credits to Poland now amounted almost to half a billion dollars--a very sizable figure and a substantial benefit to Poland's economy.
As regards the history of this year's economic negotiations, the Prime Minister ought to realize this. We did not attach political conditions to our assistance. Poland was free to come to its own decisions regarding the German question but must realize we meant business over Berlin and that if our rights were infringed a most dangerous crisis would ensue. Perhaps Poland in its own interest should consider the problem further and suggest moderation from the Eastern side.
The point I wished to stress with the Prime Minister was that while we did not make political conditions we were forced, because of the pressure of public and Congressional opinion, to take account of political conditions as they are. My country's good faith had been directly attacked in statements from which I had to disassociate myself on occasion by leaving diplomatic receptions where I was a guest. Although I respected, while disapproving, Polish feelings over Cuba, our Consulate at Poznan had been smashed up in a manner strongly resented by the American people./1/ As to our economic programs, we were not asking for thanks but simply for the type of recognition which it was in Poland's interest to provide if such programs were to continue. I knew that Congressional feeling was especially strong on this point. Again I hoped that tensions would soon ease and I asked the Prime Minister to help those of us like myself and our Government authorities, who were favorably inclined, to go on helping Poland. In speaking frankly I sincerely believed this aspect of our relations had been neglected on the Polish side.
/1/ The Consulate was attacked by a mob directed by Polish Communist officials on April 19. The incident was reported in telegram 1519 from Warsaw, April 19. (Ibid., Central Files, 748.00/4 - 1961) The United States formally protested on April 20. (Telegram 1526 from Warsaw, April 20; ibid., 122.732P/4 - 2061)
The Prime Minister said he had also spoken frankly but thought our discussion had been useful. He had some kind words to say about my contribution to the furtherance of better US-Polish relations.
We reverted briefly to the current Washington economic negotiations which I said I would look into on my return home. I referred to the very favorable Polish trade balance with the US and said it was not unreasonable to ask that Poland supplement credits with free currency purchases. The Prime Minister said the Polish Government would be happy to do so next year and in future years, but the request, coming after so much delay this year and Polish purchases of grain for hard currency was unfair. He referred to the Polish textile industry's preference for, and to a certain extent dependence on American cotton and thought we should do more to encourage this stable market. As to the exchange rate, I suggested it should be possible for the financial experts to find a solution but the Prime Minister was skeptical.
51. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/12 - 461. Confidential; Priority. Drafted by Wortzel; cleared by EE, FN, by AID and EUR/EX for the last paragraph, and by Blumenthal and the Department of Agriculture; and approved by Vedeler.
Washington, December 8, 1961, 4:05 p.m.
829. Embtels 934 and 941, Embdesp 239./1/ Dept aware considerations discussed reftels and Embdesp re Polish use exchange rates. However issue not in these terms but whether possible conclude agreement which will avoid discontinuance Treasury rate. In this connection Dept has persistently sought negotiate such agreement. No indication given Poles to date that agreement possible at official rate. Various alternatives tried including Embassy suggestions and others despite increasing indications including Trampczynski and Cyrankiewicz statements to Ambassador that Polish position firm. Possibility finding solution limited by dollar repurchase provision which represents important U.S. interest we not prepared sacrifice. In PL 480 negotiating session Dec. fifth Lychowski made clear that Polish position absolutely inflexible and that much as commodities needed agreement could not be signed at rate other than 24 - 1.
/1/Regarding telegram 934, see footnote 4, Document 49. Telegram 941, December 4, analyzed Polish approaches to the question of the zloty exchange rate. (Department of State, Central Files, 611.4841/12 - 461) In despatch 239 from Warsaw, November 29, the Embassy reported on negotiations over the zloty exchange rate. (Ibid., 611.4841/11 - 2961)
Dept considers important recognize realistic alternatives. Now fully clear that Polish position can only be tested by explicit refusal conclude agreement which does not permit preservation Treasury rate or other rate above 24 - 1. If Polish position actually as claimed this can only result in failure conclude agreement with inevitable major consequences to U.S. policy. After repeated and vigorous efforts which Dept has made since August to alter Polish position, and in view possible consequences, we satisfied that risk not justifiable. Dept therefore plans conclude agreement o/a fifteenth even if no concession exchange rate obtained./2/
/2/For text of the agreement, signed on December 15, see 12 UST 3065.
As stated Deptels 770 and 796/3/ Dept has been fully aware consequences termination Treasury rate and preparing do everything possible cope with effects official expenditures and personnel. Every effort being made avoid injury Embassy operation and programs. Allowance structure to be altered promptly upon rate change with establishment post allowance. Detailed instructions follow.
/3/Documents 48 and 49.
Rusk
52. Memorandum From the President's Deputy Special Assistant for National Security Affairs (Kaysen) to the Assistant Secretary of State for European Affairs (Kohler)
//Source: Department of State, Central Files, 411.4841/2 - 162. Confidential.
Washington, February 1, 1962.
At the request of Dr. Marian Dobrosielski I had lunch today with him and Dr. Iwaszkiewicz of the Polish Embassy. The subject of the discussion, after a certain amount of preliminary talk, proved to be PL 480 cotton for Poland. Dr. Iwaszkiewicz, who is the Commercial Counselor, detailed at some length the hardships that are being imposed on Poland by the withdrawal of our September offer to supply 40,000 tons of cotton. He indicated that they had with difficulty persuaded Warsaw to allocate $2 to $3 million for cash purchases of cotton. He said that the Embassy had discussed the matter with Secretary Freeman and Under Secretary Murphy of the Department of Agriculture and Assistant Secretary Martin of the Department of State. I explained that they were indeed the proper channels for the discussion and that I really could add nothing to what they had already learned. The essence of their position was that even if they could not get the 40,000 tons they had originally counted on they would need at least 20,000 in addition to what they could purchase with cash or otherwise they would be faced with a desperate situation and a short week in the cotton industry.
Part of the introductory discussion concerned Marxism, Keynesianism, economists and planning in Poland and the U.S. A more substantial part of it consisted of a recital by Dr. Iwaszkiewicz of the benefits that PL 480 had already conferred on Poland. These were: to permit a more rapid development of meat production than would otherwise have been possible; to sustain the Polish policy of a relatively free agriculture; and to stimulate the substitution of margarine for butter which, in turn, permitted an increase in butter exports and the development of the domestic margarine and vegetable oil industry. By contrast, Dr. Iwaszkiewicz lamented the lack of credit available for industrial purchases and stated the Polish Government's desire to expand its machinery purchases in the United States. The absence of suitable credit arrangements, however, drove them to a continued reliance on Western Germany and Britain, even though they would prefer to have the U.S. as a supply.
CK
53. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 411.4841/3 - 362. Confidential. Drafted by Wortzel; cleared by Vedeler, Katz, and Blumenthal; and approved by Davis.
Washington, March 9, 1962, 5:21 p.m.
1199. Re: Embtel 1344./1/ In order to evaluate suggestions reftel Dept requires elaboration several points. (1) Re publicity reftel speaks of full and fair public recognition of past aid. Embassy has earlier reported factual coverage last agreement front pages major papers as well as items covering first and second deliveries. As Embassy aware Dept. has insisted Polish press carry news of PL 480 agreements in pursuance US objective that Polish people be informed of US origin needed commodities. Embassy has reported that Polish people aware PL 480 assistance. Request Embassy indicate specific deficiencies press coverage, keeping in mind US objectives this regard as well as inherent limitations such coverage. (2) Reftel mention of US desiderata implies specific conditions or concessions against which level agreement should be balanced. Dept has recently informed Poles continued failure deal with dollar bonds can affect economic relations. In pursuit aim of increasing normal procurement agricultural commodities by Poles, we required Poles purchase 200,000 MT feed grains and now considering package purchase cotton under which portion would be cash or short-term credit with remainder PL 480. Leverage these or other elements bilateral relations limited by fact that current Polish request understood as supplementary December agreement and new conditions or terms raise questions including that of good faith. Request indication specific desiderata Embassy believes Dept should seek associate current Polish request in light above comments.
/1/Telegram 1344, March 3, suggested that the United States take a firmer line in negotiations for a new P.L. 480 agreement, including an insistence that adequate publicity be given to U.S. aid. (Ibid.)
US policy since 1957 and most recently stated in draft Polish guidelines paper/2/ and Embtel 653/3/ holds that PL 480 agreements are a key element in pursuit overall objectives. These include objectives affected directly by agreements themselves (preservation non-socialized agriculture, welfare Polish population), as well as others which less directly affected (ability maintain various programs and contacts). Re former, size agreements obvious factor in effective pursuit objectives, although, of course, actual determination of size various agreements based upon complex of factors. Re latter, evaluation in terms of balance against size PL 480 agreements extremely difficult if possible at all.
/2/``Guidelines for Policy and Operations in Poland," August 14, 1961. (Ibid., S/P Files: Lot 69 D 121, Poland)
/3/Document 44.
Policy further recognizes leverage derived from agreements while acknowledging limitations ability cause shifts Polish policy. Dept fully shares Embassy belief that leverage should be used where possible meet US objectives or influence Polish actions but considers essential this be considered in light total objectives.
Embdesp 331/4/ which just received contains valuable comments in light of which interested agencies will consider Polish request./5/
/4/``Comments on Recent Polish PL - 480 Requests," March 1. (Department of State, Central Files, 411.4841/3 - 162)
/5/In telegram 1429 from Warsaw, March 15, Ambassador Cabot reiterated the need for ``full and fair" Polish recognition of U.S. aid, adding ``my opinion is that we should seek to balance accounts more evenly beginning with the pending negotiations." (Ibid., 411.4841/3 - 1562)
Rusk
54. Memorandum of Conversation
//Source: Department of State, Conference Files: Lot 65 D 533, CF 2074. Secret. Drafted by Garthoff, cleared by Kohler, and approved in S on March 19. The meeting was held at the Polish Mission. Rusk and Rapacki were attending the Geneva disarmament talks.
SecDel MC/27 Geneva, March 16, 1962, 4:30 p.m.
PARTICIPANTS
United States
The Secretary
Mr. William C. Foster
Mr. Foy D. Kohler
Mr. Raymond L. Garthoff
Poland
Mr. Adam Rapacki, Foreign
Minister
Mr. Marian Naszkowski
Dr. Manfred Lachs
Mr. Henryk Sokalski
SUBJECT
International Problems and Disarmament
1. On March 16, at his request, the Secretary met with Foreign Minister Rapacki at the Polish Mission in Geneva for one hour and thirty minutes. Arrival and departure noted by the press; upon departure the Secretary noted that he had exchanged views with Foreign Minister Rapacki on disarmament and other matters.
2. The Secretary asked Rapacki his views on the prospects and problems of disarmament. Rapacki replied in general terms echoing the Soviet position. Both agreed it was unwise to have respective positions frozen too early in talks. The Secretary noted the importance of a good atmosphere for the negotiations, and commented that while both speeches on the previous day (Gromyko's and his own)/1/ had served this purpose, today's speech (by Czechoslovakia) had not done so./2/ Rapacki did not reply, but seemed to agree with the point.
/1/For text of Rusk's speech, see Documents on Disarmament, 1962, vol. I, pp. 142 - 149. Text of Gromyko's speech is ibid., pp. 94 - 103.
/2/Not found.
3. The Secretary noted the special initiative of Mr. Rapacki on a nuclear-free zone in Europe,/3/ and asked whether he had modified his proposals. Rapacki replied that he had made several proposals, originally for a nuclear-free zone and later for a staged plan in which initially the obligation would be not to arm with nuclear weapons states in the area not now possessing them, and later to provide for removal of all nuclear armaments. However, there had been no concrete reactions to his proposals, so he did not now have concrete modifications. The Secretary inquired specifically on the geographic areas of coverage of such zones, and Rapacki noted proposals on Scandinavia, the Balkans, Africa, as well as Central Europe.
/3/For text of the original Rapacki proposal submitted to the U.N. General Assembly on October 2, 1958, see Documents on Disarmament, 1945 - 1959, vol. II, pp. 889 - 892. Rapacki submitted an amended proposal on November 4, 1958; see ibid., pp. 1217 - 1219. On March 28 in Geneva, he submitted to the Eighteen-Nation Disarmament Committee another revised plan for a nuclear-free zone in Europe; see ibid., 1962, vol. I, pp. 201 - 205.
4. The Secretary noted that the problem of disarmament could not be separated from its political context. Rapacki said that the key was peaceful coexistence. The Secretary recalled--as a soldier in 1945 - 1946--that the US had demobilized at that time, but had since had to rearm and quadruple its military expenditures due to actions which could scarcely be called peaceful coexistence: Greece, the first Berlin Blockade, Korea and others. Current prospects for disarmament were not separable from political issues, particularly Berlin.
5. The Secretary noted that the other side seemed to have disposed of East Berlin, why then could we not dispose of West Berlin, and there would be no problem. Rapacki treated the suggestion as not a serious one. He countered that in reality the FRG, and the GDR with its capital in Berlin, both existed. The Secretary commented that, candidly, in this off-the-record conversation, he felt that if the East Germans had been more successful internally--like the Poles--the question of Berlin would not have arisen. Rapacki agreed, commenting that he would not, candidly, attempt to argue that all of the East German population favored the regime. Many had ``escaped". But, he contended, the GDR had renounced all previous German expansionist designs, and had accepted a just frontier with Poland. These were not entirely popular moves in Germany (East or West), but they were good and necessary.
6. The Secretary inquired whether, frankly, Minister Rapacki as a Pole, Socialist, ``imperialist," or whatever, did not consider the past history of dangers and difficulties from neighbors both to the East and West, and whether from this standpoint he really wanted to see US troops withdrawn from Europe. Rapacki replied that they did not propose such withdrawal, but the Secretary noted that others did. Rapacki stated that they favored disarmament with withdrawal of all troops to their own countries, and early abolition of all nuclear delivery means. The Secretary commented that if nuclear weapons were withdrawn and political issues remained unsettled, there might have to be a very large increase in conventional arms.
7. The Secretary noted that, in a broad sense, all the disarmament matters with which we were concerned were ``regional" problems of the northern hemisphere. He said that if we were unable to solve the political problems which we faced, he would hate to predict the future of the northern hemisphere--this was by no means a threat, nor was he necessarily pessimistic, but it was recognition of a real danger. The Secretary declared that he considered the greatest danger to be that of both sides sitting down to the conference table believing that the other side would not go to nuclear war. Rapacki and his colleagues were initially stunned. The translation was rechecked at Rapacki's insistence, but he remained non-plussed. The Secretary expatiated on this theme, stating with quiet emphasis that the United States would not be pushed out of West Berlin. He noted West Berlin and South Vietnam as cases of non-``peaceful coexistence" aggression. Rapacki noted that the Poles had only representation on the Commission in South Vietnam. Vice Minister Naszkowski, in an aside interjection, muttered ``who was the aggressor in Vietnam," but Rapacki quickly changed the subject to say that Berlin was the key problem and danger. The Secretary stated that the presence of the US in West Berlin was a stabilizing influence, to which Rapacki did not reply.
8. The Secretary commented that over the past century the causes of war had declined--no longer were wars waged over dynastic questions, protection of nationals, for trade rights, or the like. The remaining causes are dangerous enough, but fortunately are fewer. Rapacki demurred from this, noting wars of recent decades. Rapacki stated that there had been an important change in that now no class would be served by war, but that the class aspect of policy remained. Rapacki stated that so far as they were informed, their side would not do anything to stir up risk of war.
9. The question of Germany arose in many contexts. Rapacki did reiterate long-standing themes of West German revanchism and irreconcilability to the Polish frontiers. He admitted frankly that the Poles do not want German unification under contemporary circumstances, do not want an all-German election which they know the Communists would lose, and do fear West German designs. Rapacki said he thought the Poles, and the other Socialist countries, were not alone in not desiring German reunification. The Secretary took cognizance of the German problem and suggested reunification as the best long-term guarantee against future recrudescence of expansionist nationalism in West and East Germany. The Poles seemed to be unmoved on this point. The Secretary stressed importance of the integration of West Germany into the European community as a safeguard, and Rapacki nodded agreement.
10. The meeting, which was the first which the Secretary held in Geneva with any Bloc Minister other than the Soviet one, was in a cordial and relaxed atmosphere. Rapacki was, of course, under some compulsion not to stray from the established Bloc line on disarmament and the Berlin and German questions (particularly with Naszkowski present), but he managed nonetheless to convey the impression of at least limited independence of judgment and even of policy.
55. Memorandum of Conversation
//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Garthoff and approved in S on March 22. The meeting was held at the U.S. Mission.
SecDel MC/41 Geneva, March 21, 1962, 5 p.m.
PARTICIPANTS
United States
The Secretary of State
Mr. Foy Kohler
Mr. Raymond Garthoff
Poland
Mr. Adam Rapacki, Foreign
Minister
Mr. Marian Naszkowski, Vice
Foreign Minister
Mr. Henryk Sokalski
SUBJECT
General Exchange of Views
1. In a return visit to that paid by the Secretary, Mr. Rapacki came to the US Mission on March 21 for a meeting of approximately one and one-quarter hours. Underlying general differences and problems in East-West and Polish-US relations formed the chief subject of discussion.
2. The Secretary noted that disarmament involves many problems. For example, our own constitutional practices require us to proceed in a certain way. We have used the term ``treaty or treaties" for general disarmament because there are limits on what long-range commitments our Senate can ratify. Our trade agreements are only made for two or three years. We are for general and complete disarmament, but once Stage One has been agreed and put into practice it will be much easier to see the detailed form for the later stages. Rapacki indicated that he understood, but he seemed to interpret the reason for a cautious approach on our part in political rather than juridical terms, and said that he understood that while our general interest was disarmament, special interests in the US were opposed and had to be convinced and overcome. He made no comment on the specific form a disarmament agreement should take (though in his speech earlier at the plenary session he had spoken out for the Soviet draft treaty as the only approach)./1/
/1/For text of the Soviet draft treaty, see Documents on Disarmament, 1962, vol. I, pp. 103 - 127.
3. The problem of the economic problems and consequences of disarmament was briefly discussed. Rapacki stated that Poland had for her part disarmed to a degree in 1956 - 1957, without serious economic difficulties. The Secretary noted that with due time economic adjustments occasioned by disarmament were no problem for the US. And the US would like nothing better. In individual cases, such as the locality around a large aircraft plant, there were of course some short-run problems. Rapacki raised the question of economic aid to other countries. The Secretary noted that this depended in part on the readiness of the recipient countries to absorb aid. Rapacki pressed on the question, mentioning India as an example, and discussion followed on the economic, social and health context of effective aid.
4. The Secretary remarked that he would like to note in this private discussion that a sophisticated understanding was needed on both sides of the peculiar problems impinging on US-Polish mutual relations. On the one side, we recognize that Warsaw has only limited influence on relationship between Warsaw and Moscow. On the other side, we hope they will realize that internal US political situation and the imperatives of internal political debates compel us to take public account of Poland's membership in the Communist Bloc. We base our relations with Poland, however, on the basis of bilateral interests rather than simply with Poland as a member of the Communist Bloc. When Rapacki had clarified that the Secretary was not seeking an agreement on reciprocity of these considerations, but rather noting them as illustrations on each side of matter requiring delicate understanding, he agreed.
5. The Secretary asked Mr. Kohler to speak of any problems in bilateral relations between our countries. Kohler noted the improvement and satisfactory state of such relations, and Rapacki agreed. Rapacki noted hopes for increased trade, including Polish interest in capital investment goods as well as in consumer goods. The Secretary reiterated that the US understood that Warsaw was not able to ignore broader US-USSR differences, but that we did not hold Warsaw responsible for them.
6. The Secretary asked Rapacki what he considered to be the biggest change in Soviet policy since the death of Stalin. Rapacki replied that peaceful coexistence, the "reconstruction" of the general line of Soviet foreign policy under Khrushchev, was clearly the major change. As specific points, he mentioned meetings with Western leaders, travel and opening up of contacts between peoples. The Secretary stated that we were concerned over such indications of non-peaceful interests as the declaration of the communist parties in November 1960,/2/ and Khru-shchev's speech of January 6, 1961,/3/ on spreading communism. If these were declarations of faith and expectation, that was one thing; if a program of action, that was another. It often appeared to us that it was the latter. Rapacki replied that it was a matter of belief, and of action in striving to win economic competition, which they saw as the main arena. The Secretary pressed for clarification of such declarations, and Rapacki responded with the same explanation, adding that Khrushchev had never said that they would force communism on anyone, that forceful imposition of socialism was not possible. Naszkowski added that Khrushchev had in fact asserted that force would not be used.
/2/For text of the statement, see Current Digest of the Soviet Press, December 28, 1960, pp. 3 - 9, and January 4, 1961, pp. 3 - 8.
/3/Extracts of Khrushchev's speech are printed in Documents on Disarmament, 1961, pp. 1 - 15.
7. Rapacki said that Khrushchev had said not only in public but in closed session (apparently in November, 1960) that peaceful economic competition was the only means to victory for communism. He also said that in closed session Khrushchev had declared that communism would not come until they had more sausages than the West. (Later in the discussion, in an apparent allusion to this figure of speech, Rapacki said the Chinese Communists had been rushing too fast--and their table was bare.)
8. The Secretary remarked that he hoped relations between the US and the USSR could be on the basis of state interests rather than ideologically motivated political action. The Secretary added that he thought the Soviets were beginning to see this too, and that one of the issues of dispute between the Soviets and the Chinese was on this basis. Rapacki replied that the Soviets, and Chinese too, did act on the basis of national interests. They shared the same general aims. The US, declared Rapacki, has been placed in the unsought position of potential arbiter between the USSR and Communist China. The Secretary expressed surprise. Rapacki commented that the US, by demonstrating the possibility and success of the peaceful coexistence policy, can bring the Chinese and Russians together on the basis of such a policy. The Secretary remarked that having us as a common foe was one of the chief elements holding the USSR and China together. The Secretary asked about Communist pursuits of world revolution, as perhaps against their national interests. Rapacki dismissed ``world revolution" as a discredited Trotskyite slogan, and reaffirmed the belief of the Communists in victory through demonstration of a superior economic system.
9. The Secretary noted that there were those who saw some possibility of a gradual evolutionary merging of our widely disparate systems. Thesis and antithesis (of present systems) might lead to a new synthesis. In the US, large corporations paid 75 percent of their profits in local state and federal taxes. There was some planning involved in import-export arrangements. The Secretary said that Ambassador Galbraith had once written that in ``Socialist" India there was more free enterprise than in the US. Rapacki noted that there were different kinds of ``socialism". India and Cuba don't have socialism in the sense they understand it. There are differences between Polish, Soviet, Chinese socialism. When India does have socialism, it will be its own form.
56. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/4 - 1362. Confidential. Drafted by Katz and approved by Blumenthal.
Washington, April 13, 1962, 5:01 p.m.
1368. We informed Drozniak and Lychowski April 12 our readiness conclude immediately amendment Dec 15 agreement providing Title I sale 92,000 bales cotton and 10,000 MT rice. Sale conditioned on Polish agreement purchase in US with own resources 46,000 bales cotton and 10,000 MT rice. Also informed them we unprepared consider at this time grain and other commodities requested Feb 20 but expect be able begin discussions about June 1. Stated that in meantime Embassy Warsaw would be instructed raise with Polish Government certain matters of concern such as questions publicity and dollar bonds. Noted that PL 480 negotiations must be viewed in totality our relations. Extent to which problems cited above affect our relations cannot fail be weighed in consideration PL 480 matters.
Drozniak appreciative cotton decision although noting hope for larger amount. He expressed concern delay re grain pointing out last year's crop overestimated. Late spring and insufficient deliveries from peasants aggravating grain problem. Indicated his intention seek acceleration negotiations on grain. Dept representatives were not encouraging on this score.
Re publicity Ambassador stated no problem since he discussed matter during Warsaw consultations and was assured adequate publicity would be forthcoming. We noted statement and observed this would ease our Embassy's task. Re bonds he questioned usefulness Embassy raising matter since Polish attitude not negative. Problem was one of finding resources to pay obligations. This would be facilitated by credits for purchase export generative equipment. Dept representatives emphasized importance attached resolution bond problem, indicating in response Drozniak question that our desire for satisfaction publicity and bond matters one of several factors leading decision defer consideration grain and other commodities until June 1.
Instructions being pouched April 16 will deal matters to be raised by Embassy./1/
/1/Not found.
Rusk
57. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/4 - 1762. Confidential; Priority.
Warsaw, April 17, 1962, 5 p.m.
1632. Re Deptel 1368./1/ I am gratified with Department's insistence on Polish cash purchases cotton and rice as condition Title I sales those commodities under amendment December 15 agreement. Nonetheless, Department's proposal remains clearly very attractive financial proposition for Poles which they should not be permitted to realize without at least some concrete concessions to our reasonable requirements.
/1/Document 56.
Therefore and as a minimum I must reiterate and strongly urge that a communique fully describing and explaining the background of total US economic aid to Poland since 1957, be negotiated and accepted for wide distribution by the Polish side as an integral part of the proposed amendment (Embdes 352)./2/ I consider this to be a matter of right and prudence for the reasons cited in A - 519/3/ and not a new or unreasonable condition. (Perhaps as Drozniak suggested, publicity will pose no problem, however when we discussed it with him in Warsaw he dismissed our complaint as unjustified and no consequence.)
/2/Despatch 352, March 16, discussed Polish publicity for P.L. 480 agreements. (Department of State, Central Files, 611.484/3 - 1662)
/3/Airgram A - 159, March 15, discussed ways to utilize P.L. 480 aid to increase U.S. influence in Poland. (Ibid., 611.48/3 - 1562)
I believe we must show the Poles now that we really mean business on publicity. To do so will provide an immediate practical test of Polish intentions, possibly settle the problem, and facilitate moving on to other matters in the forthcoming negotiations. To fail to do so now only postpones the matter unnecessarily and prejudices its later presentation in Warsaw. Parenthetically, Gomulka's April 13 statement (Embtel 1610)/4/ about economic competition with capitalism and textile raw material imports for which Poland ``must pay" is further evidence of the need for and significance of adequate publicity for US aid.
/4/Telegram 1610, April 16, reported on Gomulka's speech on export policy. (Ibid., 411.4841/4 - 1662)
I am also gratified that Department's postponement of consideration of Polish grain requests will give us an opportunity to begin to balance accounts more evenly. In this connection I look forward to receiving the instruction pouched April 16. I trust any further negotiations will enable us to obtain some of the advantages mentioned in previous Embassy communications./5/
/5/In telegram 1392 to Warsaw, April 10, the Department of State reiterated its disinterest in a joint U.S.-Polish statement and the reasons for this position and informed the Embassy that it believed that the two sides were on the verge of an agreement on a cotton and rice amendment that it hoped to sign on April 19. (Ibid., 611.4841/4 - 1762) For text of the agreement as signed on that date, see TIAS 4998.
Cabot
58. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/4 - 2762. Confidential.
Warsaw, April 27, 1962, 5 p.m.
1721. Department's A - 70 and Department telegram 1392./1/ Saw Under Secretary Winiewicz today and raised with him two matters mentioned in airgram. Re publicity Winiewicz indicated considerable had been given, that publicity re help from other members Communist bloc had also declined in recent years, and that because of the existence in Polish Communist Party of a hard core which opposed all PL 480 agreements with US it was difficult to publish strongly favorable articles.
/1/Airgram A - 70, April 14, instructed the Embassy to inform the Polish Government of continuing U.S. dissatisfaction with inadequate media treatment of P.L. 480 assistance. (Ibid., 611.48/3 - 1562) Regarding telegram 1392, see footnote 5, Document 57.
With regard to matter of foreign indebtedness Winiewicz reminded me that Poland had scrupulously met all obligations to US even at height of cold war and indicated that Poland was hesitant assume further obligations which it might not be able to service.
He suggested that both matters be discussed with Trampczynski Minister Foreign Trade, when he makes his visit to US.
I doubt that anything will be done regarding either matter despite my representations but I shall endeavor to follow them up at an appropriate time./2/
/2/In telegram 1457 to Warsaw, April 30, the Department of State reported that it would raise the questions of publicity and bonds with Trampczynski during his visit to Washington. It instructed the Embassy to continue to press both matters with the Polish Government. (Department of State, Central Files, 611.4841/4 - 2762)
Cabot
59. Memorandum From the Executive Secretary of the Department of State (Battle) to the President's Special Assistant for National Security Affairs (Bundy)
//Source: Department of State, Central Files, 411.4841/5 - 362. Confidential. Drafted by Barnsdale and Wortzel and cleared by Weiss, Tyler, and Vedeler.
Washington, May 3, 1962.
SUBJECT
Legislation to Deny Most-Favored-Nation (MFN) Treatment to Poland and Yugoslavia
If successful, current efforts to deny Most-Favored-Nation (MFN) treatment to Poland and Yugoslavia, by specific legislation, would jeopardize much of our policy toward those countries. The denial of MFN treatment to Poland and Yugoslavia would run directly counter to our policy, which has been to draw those countries closer to the West and to provide an alternative to their dependence on Soviet Bloc countries in trade and other fields. Such legislation would also be undesirable in that it would limit Presidential flexibility in dealing with our bilateral relations with Poland and Yugoslavia.
The material effect of the denial of MFN treatment to Poland and Yugoslavia would not be substantial in terms of our own import trade, and might not be great in terms of present levels of Polish and Yugoslav export trade to this country. However, it could seriously impede the growth of their trade relations with this country in particular, and, by limiting their earnings, with the West in general. We could also expect our action in withdrawing MFN treatment to serve in a real sense as an indication to our allies of a hardening attitude and policy toward both Poland and Yugoslavia. We could expect such an interpretation to encourage in Western Europe the taking of harder lines toward Poland and Yugoslavia not only in the field of trade but in other broader areas of policy. Our action might indeed be welcomed by nations whose products compete with those of Poland and Yugoslavia, e.g. Greece, and any subsequent action on our part to restore MFN treatment to these countries could be made difficult by such attitudes on the part of our allies.
The ultimate consequences for Polish and Yugoslav policies would be out of proportion to the effects of our action in the field of trade. The Polish and Yugoslav reactions would probably be extreme. The full consequences of our action would be certain to slow the existing favorable developments in extending our influence in those countries. Additionally, we would have to reckon with the possibility that past favorable developments might even be reversed. Taken in conjunction with other factors in today's international situation, such as Soviet pressures on Poland to support fully Soviet policies in Germany, and Polish and Yugoslav fears of the possible effects of the Common Market on their European trade, we could expect a realistic if not pessimistic reassessment on their part of the desirability of relying upon the West. This is particularly true of pro-Western individuals who may have staked their personal positions upon the prospects of the increasing association of their country with the West and who would suffer disillusionment at this negative and backward-turning action of the United States.
With specific reference to Poland, it will be recalled that on April 16, 1958, in the wake of the changes which had taken place in Poland since 1956 and consistent with developments in United States policy toward Poland, President Eisenhower approved a recommendation that Most-Favored-Nation status be restored to Poland at an appropriate time./1/ It was subsequently decided that this action should be taken as soon as a nationalization claims agreement was concluded with Poland.
/1/For text of NSC 5808/1, see Foreign Relations, 1958 - 1960, vol. X, Part 2, pp. 110 - 120.
During negotiations leading toward a claims settlement, United States representatives informed the Poles of this. A claims agreement was concluded with Poland July 16, 1960 and, on November 16, 1960, the President ordered the restoration of MFN status to Poland./2/
/2/For text of the agreement on the settlement of claims against Poland, see 11 UST 1953. For text of the letter from President Eisenhower to the Secretary of the Treasury restoring MFN status to Poland, see Department of State Bulletin, December 5, 1960, pp. 863 - 864.
The implicit finding that Poland was eligible for MFN status within the meaning of Section 5 of the Trade Agreements Extension Act of 1951/3/ was analogous to the earlier explicit finding by the Secretary of State that Poland was a ``friendly nation" within the meaning of PL 480, the criteria for such determination being identical for the two acts.
/3/For text of P.L. 50, the Trade Agreements Extension Act of 1951, approved June 16, 1951, see 65 Stat. 72.
In restoring MFN status to Poland, we had in mind the connection between Poland's ability to earn dollars in the United States market and its ability to meet its substantial dollar obligations to the United States. These include contingency fund credits totalling $61 million, dollar repayment obligations under PL 480 agreements which, by now, exceed $400 million, obligations to American national holders of Polish dollar bonds, and $40 million in settlement of nationalization claims.
In the case of Yugoslavia, there is no reason consistent with the established legislative criteria dealing with MFN treatment which would justify taking what amounts to punitive action against Yugoslav trade with the United States. There is no question of Yugoslav domination by the world Communist movement, and Section 5 of the Trade Agreements Extension Act of 1951 has never been applicable, therefore, to Yugoslavia. We are convinced that the withdrawal of MFN treatment would be interpreted as an indication that the United States considers Yugoslavia has returned or is in the process of returning to the Bloc.
There can be no doubt that the taking of legislative action to deny MFN treatment to Poland and Yugoslavia would constitute a reversal in a real sense of our long-standing policies toward these countries. Moreover, in the case of Poland the withdrawal of MFN treatment would clearly violate our assurances given to that country at the time of the negotiation of the United States-Polish claims agreement. In neither case can we see any justification nor any gain but only loss. We urge every effort to forestall this action.
Lucius D. Battle/4/
/4/Printed from a copy that bears this typed signature. E.S. Little signed for Battle.
60. Memorandum of Conversation
//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Katz and approved in U on May 9.
Washington, May 4, 1962, 3:30 p.m.
SUBJECT
Call of the Polish Ambassador
PARTICIPANTS
The Polish Ambassador, Edward Drozniak
Dr. Marian Dobrosielski, Counselor
The Under Secretary
Mr. Griffith Johnson, E
Mr. W. Michael Blumenthal, E
Mr. George Springsteen, U
Mr. Julius L. Katz, EE
After describing the satisfaction of his Government at the general course of US-Polish relations, the Ambassador expressed his serious concern over the US intention to delay until about June 1 the sale to
Poland of grain and other commodities under PL 480. If discussions commenced on June 1, it was likely, on the basis of previous experience, that deliveries would not begin until late September. This would coincide with deliveries from Poland's own harvest and would not alleviate Poland's immediate need for grain. The Ambassador explained that the present shortage arises from the over-estimation of production last year, as well as the fact that peasant deliveries have lagged because of international tensions and the late Winter in Poland. The Polish Government would not like to resort to forced deliveries and therefore hopes to meet the situation by means of imports from the US. The Ambassador therefore requested that Poland's request of last February, for 600,000 tons of wheat, be considered immediately. He hoped that a decision could be reached during the visit to the US of Poland's Foreign Trade Minister, Mr. Trampczynski.
Mr. Ball asked Mr. Katz what were the possibilities for accelerating discussions on grain. Mr. Katz noted that June 1 was not far off. Moreover, he pointed out that the Ambassador's assumptions about the interval between initiation of discussions and the beginning of deliveries was not necessarily correct. While on some occasions our negotiations were long drawn out because of extraneous factors, we have on other occasions concluded negotiations very quickly, witness the recent amendment on cotton which was concluded in less than five days. Mr. Katz pointed out that we also wished to evaluate the results of discussions in Warsaw on certain matters of concern to the US.
Mr. Ball emphasized that we were most concerned about Poland's failure to take steps to settle the problem of defaulted dollar bonds. He requested the Ambassador to impress upon his Government our difficulty in accepting new financial obligations from Poland while old obligations were in default.
Ambassador Drozniak stated that during his recent consultations in Warsaw he raised the question of bonds and this question is being considered seriously there. He regretted that he had no instructions as yet. He was informed about Ambassador Cabot's conversation with Deputy Foreign Minister Winiewicz/1/ and was hopeful Minister Trampczysnki would bring with him some word on the bond problem.
/1/See Document 58.
At the conclusion of his visit the Ambassador stated that the bulk of Polish-American relations was pleasant but there had recently been an unpleasantry--our rejection of the Rapacki Plan./2/ Our rejection was so swift and so out of hand as to have caused astonishment, not only by the Polish Government but by the population at large. The Polish Government continues to believe the idea of the Rapacki Plan to be sound and hopes one day it will be seriously considered.
/2/For text of the April 3 U.S. statement, see Department of State Bulletin, April 23, 1962, pp. 664 - 665.
Mr. Ball commented that it was not as though the Plan had not been given consideration. It had in fact been considered over some period of time. We could not afford, however, to permit any confusion or misunderstanding as to our position. We just do not feel that the assurances which exist in present East-West relations are adequate for an arrangement such as is envisaged in the Rapacki Plan.
61. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 411.4841/6 - 1562. Confidential. Repeated to Belgrade.
Warsaw, June 15, 1962, 4 p.m.
2082. Department pass Commerce. Behrman called June 14 Trampczynski, Jedrychowski and Winiewicz. Approximately one hour conversation each. At Behrman request Trampczynski outlined future Polish trade West, expressed concern common external tariff Common Market, particularly affecting Polish agricultural exports. However, said 1962 - 1963 expected no appreciable problem this sector. In discussion possibilities Polish relationship GATT, freely admitted problems posed by trade relations two differing economic systems but offered no solutions. Trampczynski stressed importance foreign trade to development Polish economy, asserting that expectations were for growth of industrial goods exports. In reply to question of how Poles would work to reduce common external tariff Common Market, Trampczynski offered no effective reply. Did show considerable interest in working towards method of accommodating state trading procedures to demands of free world traders, but again nothing specific.
Trampczynski, Jedrychowski and Winiewicz took same position on problems which prevent trade from developing between Poland and United States. First, lack technical knowledge goods available US (2) lack commercial credits (3) tightness export controls. Argument was that without knowledge of technical capabilities of American products, purchases often led to inefficiencies and inadequate tooling up of plant. Also that relatively greater knowledge Western European and UK capabilities led to greater imports from these countries. On second point asserted Johnson Act detrimental since did not affect grade other countries, and on third, that application embargo delayed trade and made planning difficult since could not know what could be obtained and whether future plans might be interrupted or inconvenienced.
Behrman replied each of these to effect that first would be resolved if trade opportunities in Poland became greater so that private business felt it worthwhile spend time sales effort, that present was no time to attempt change Johnson act but that in fact Poles could take care of situation by joining IMF. Trampczynski and Jedrychowski indicated IMF membership low priority, mentioning specifically that consideration had been given to this 1958 but support not forthcoming when Poles took initiative. General impression from discussion was that political realities in bloc prevent any strong move by Poles towards IMF. Seemed to be full understanding that US could not [omission in the source text] on Johnson Act./1/ Jedrychowski stressed Poles intended pay every cent of debts, including World War I and interim, not indicating any precise period in which this expected to be done. On third point of embargo and trade policy, Behrman stressed attitude Congress as presented by possible position on MFN in trade bill and amendments to Export Control Act. Brunt of argument here was that Congress saw no real return to US from deferential treatment to Poles compared with rest of Soviet bloc, and that recent political and economic moves by Poles showed closer identity with bloc, which Congress tended to feel would remove justification for continuing deferential treatment.
/1/Reference is to the Johnson Debt Default Act, signed on April 13, 1934, which prohibited financial transactions with any foreign government in default in its obligations to the United States. (48 Stat. 574) The act was amended on July 31, 1945, to exempt foreign governments that were members of both the International Monetary Fund and the International Bank for Reconstruction and Development from some of its provisions. (49 Stat. 516)
Jedrychowski stressed MFN treatment negotiated by Poles as part property claims settlement 1960 and removal would be contrary such agreement. Trampczynski indicated MFN worth half million dollars in trade 1961 (our estimate and that of his subordinates considerably larger and would be worth much more in 1962).
Conversation Winiewicz stressed long-run friendship US despite ups downs current problems. Although stressed Poland politically and economically tied Soviet bloc, point also made that reliance by Poland on socialist trade actually much less than assumed outside and probably less than figures showed. Said Polish policy to increase amount trade with West. Behrman replied Common Market economically integrating with intention trade externally but moving toward political integration as well and that CEMA integration would weaken basis for continuation of Polish deferential treatment. On export control point Wieniewicz argued that no control policy could in fact prevent economic growth and policy had in fact caused creation of shipbuilding industry in Poland--obviously at great cost but now pride of their economy.
Jedrychowski and Winiewicz both made special point at length that no political conditions could be imposed on Poles for continued deferential treatment, that no specific action would be taken to make congressional continuation of deferential treatment easier, and that political and economic unity with socialist group was overriding consideration of all policies vis-a-vis West. Within these limitations Winiewicz stressed desirability long-run friendship and hopefulness that ups and downs could be weathered. Behrman replied long-run friendship certainly sought and philosophical approach taken by Winiewicz hopeful in view fact Congress might at some time restrict flexibility executive.
While Winiewicz particularly raised specific points such as [garble] indebtness and publicity in Poland on US/Polish economic agreements, saying everyone in Poland knew of US-Polish trade relations, no attempt made settle any particular issue nor were any raised from our side. Behrman explained on each occasion that objective was fuller understanding broad situation in which each country had to operate.
Although all three made no indication Poland considering any changes external position which could contribute to improvement relations, value of talks lies in opportunity make abundantly clear that Congress unhappy current position these relations and that Poles must consider importance every move which weakens hand of administration in effort continue deferential treatment Poland as member Soviet bloc.
Behrman checked with me approach to be taken in discussion. I concurred in a firm line on above points and feel it important that opportunity was taken by Washington official to present this to high officials in Polish Government. Further, every opportunity in future should be taken to stress necessity of Poles to demonstrate mutual profit to US as result of deferential treatment. Behrman concurs in record discussion above.
Cabot
62. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/7 - 662. Confidential.
Warsaw, July 6, 1962, 5 p.m.
48. Under Secretary Winiewicz today called me in and handed me aide-memoire MFN matter. This aide-memoire refers to discussions in both houses of US Congress which ``have already adopted certain provisions which clearly aim at a return to cold war practices in trade and financial relations." ``As is well known MFN clause was restored by USG in November 1960 in conjunction with undertaking by Polish Government to start compensation payments in amount of 40 million dollars. This undertaking by PPR was in fact made conditional--on basis gentlemen's agreement--upon granting by US of said clause to Polish exports. Government of PPR has been strictly discharging its obligations."
Aide-memoire then goes on to argue at some length that present obligations already impose strain on Polish balance of payments and that rescinding of MFN ``could prevent Poland from discharging her undertakings."
In course of discussions Winiewicz pointed out that effect of drastic economic measures against Poland would be to cause a sharp worsening in Polish-American relations. He said MFN more important for Poland than PL-480. Such worsening of bilateral relations at moment when world outlook seemed to be perceptibly brightening would be very unfortunate. I said that though impression prevailed in US that Poland getting bulk of benefits from our economic relations and though some illusions regarding Poland had been shattered, I would consider it deplorable if there were to be sudden worsening of relations.
As Department aware (Embtel 2118 June 20),/1/ I feel strongly that we would be defaulting on moral obligation if cancellation of MFN for Poland should become law. Also considering fact that Poland, if MFN cancelled, probably would not and could not meet obligations, it would seem to me counter-productive from viewpoint our immediate interests to cancel clause. Even for those who believe that Poland should not have benefit of any favorable economic ties with the US, it would seem to me that this is wrong way to go about achieving desired result. I earnestly hope therefore that Congress can be persuaded to reverse itself in this matter.
/1/In telegram 2118, Cabot stressed his belief that withdrawal of MFN status from Poland violated a U.S. moral commitment. (Ibid., 611.4841/6 - 2062)
Cabot
63. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/9 - 1362. Confidential.
Warsaw, September 13, 1962, 1 p.m.
500. Department telegram 320./1/ Called on Deputy Foreign Minister Winiewicz September 12 at my request for further discussion publicity and bonds. In response my question whether he could provide any further information these questions in light his discussions with government leaders (Embassy telegram 377)/2/ he stated following. Re bonds could go no further than basic statement on intent contained annex to 1960 claims agreement pending further developments affecting balance of payments. MFN cited as one unknown quantity imbalance [in balance?] of payments formula. Re publicity, he stated that in opinion many Polish Government leaders past publicity had been adequate and that all economists and others concerned were fully aware magnitude and generous terms American economic assistance. For internal political reasons could not officially give any assurances that publicity following conclusion any further PL-480 agreements would be more complete than in previous years. He said he could add, unofficially however, that he had seen the drafts of several articles on this subject which were more complete and might be published depending upon outcome next round of negotiations.
/1/Telegram 320, August 30, reported that the Department of State had informed the Poles that it expected to begin P.L. 480 discussions in September and instructed the Embassy to press the Polish Government on publicity and bonds. (Ibid., 411.4841/8 - 2462)
/2/Telegram 377, August 25, reported Polish interest in information about P.L. 480 payments. (Ibid., 411.4841/8 - 2562)
I told Winiewicz that in my opinion these limited assurances were not satisfactory but would report them for Department's consideration. He departs for UN September 15 or 17.
Sherer
64. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/9 - 1362. Confidential. Drafted by Wortzel and approved by Vedeler.
Washington, September 15, 1962, 12:15 p.m.
391. Re Embtel 500./1/ Dept agrees Winiewicz statements unsatisfactory re both bonds and publicity. Re former not clear whether Embassy made point contained in last paragraph Deptel 320 in rebuttal Winiewicz comment on MFN./2/ Polish reference to 1960 statement of intent seeks to ignore point that our present initiative caused by their failure effectuate this statement for over two years. Re balance of payments difficulties we can point out that benefit Poles gain this regard from PL 480 agreements contributes to ability deal with bond indebtedness and that we cannot ignore this.
/1/Document 63.
/2/See footnote 1, Document 63. The last paragraph reads: ``Believe question bonds should be pursued at this time. In this connection if question MFN raised as affecting ability deal with bonds you may suggest they assume no change on basis discussion tentative pending completion legislative action on Trade Expansion bill."
Re publicity useful point out that we as well as Poles have internal political considerations and that ours dictate our receiving more than unofficial hints of future action. We cannot accept situation in which Poles ask us make commitment in form of agreement while saying that they ``might" then provide some publicity.
Not clear from last paragraph reftel whether Embassy plans continue discussions at FonOff during absence Winiewicz. While we intend indicate our dissatisfaction to Poles here and may express our views to Winiewicz in New York, we believe that discussions must continue in Warsaw. Poles may be informed that if discussions suspended until return Winiewicz, they must anticipate effect on timing negotiations./3/
/3/In telegram 524 from Warsaw, September 17, the Embassy reported that during the discussion Winiewicz showed a complete understanding of the status of the trade bill and also indicated that even in favorable circumstances he could give no assurances on meaningful actions on the bond issue. (Department of State, Central Files, 611.4841/9 - 1762)
Rusk
65. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/9 - 2762. Limited Official Use. Repeated to Belgrade.
Warsaw, September 27, 1962, 4 p.m.
606. Reference: Deptel 448./1/ I realize that it is probably now impossible to do anything about MFN in view of Conference Committee's action./2/ Nevertheless, it seems to me important to point out that this action is not only breach of a commitment which was certainly implied but also stupid from viewpoint our most immediate interests. I think it probable that Poles will immediately default on nationalization agreement alleging that we have broken agreement and perhaps adding that congressional action makes it impossible to secure means to continue service on agreement (Embassy A - 27)./3/
/1/Telegram 448, September 26, reported that congressional action on removing MFN status from Poland and Yugoslavia had been taken in spite of President Kennedy's intervention. (Ibid., 711.48/9 - 2662)
/2/Regarding the congressional action on MFN, see Document 130.
/3/Airgram A - 27, July 13, forwarded the text of a Polish aide-memoire on P.L. 480. (Department of State, Central Files, 611.48/7 - 1362)
I am also somewhat apprehensive of effect congressional action will have on outstanding PL480 Agreements. Embassy has evidence from various sources that Poles are effecting number of economies in their foreign exchange budget. This is probably a reflection of the relative shortage of grain throughout bloc this year and consequent necessity of further hard currency purchases in West coupled with strain of Canadian grain purchases already undertaken. It also probably reflects uncertainty regarding new PL 480 Agreement. Moreover difficulties in fulfilling plan for industrial exports West are apparently causing concern. It is our impression that Poles are genuinely short of foreign exchange to cover what they consider minimum necessary import program.
Question of Polish dollar commitments under present PL480 Agreements will of course not arise for nearly 5 years. Nevertheless, I consider it increasingly doubtful whether Poles will or indeed could meet these commitments since most Polish trade with other Western countries is tied to bilateral arrangements and hard currency surplus to repay PL480 commitments was scheduled to come largely from increased access to US market. This in turn should presumably be taken into account in any negotiations we undertake regarding new agreement. Poles can be expected to apply increasing pressure for elimination of hard currency repayment provision as date for first payment approaches using line that we have disposed of useless agricultural surpluses and are now demanding dollar repayment while refusing Poles opportunity to earn dollars in US market on equitable basis.
On the other hand we must realize that to refuse to enter into a new agreement because of the difficulties which Poland would undoubtedly have in meeting service on such an agreement under present circumstances would result in sacrificing all gains in our relations for past five years and would probably lead to as chilly a period as chilliest of cold war.
In any event, I consider it a waste of time to discuss further any possibility of a bond settlement.
Cabot
66. Telegram From the Department of State to Secretary of State Rusk, at New York
//Source: Department of State, Conference Files: Lot 65 D 533, CF 2150. Secret; Niact; No Other Distribution Even On Limited Basis. The Secretary was attending the 17th session of the U.N. General Assembly. See also Document 132.
Washington, September 28, 1962, 9 p.m.
Tosec 59. Eyes only for Secretary. (Attention: Mr. Swank) From Dutton. Per our conversation:
``Memorandum for the President, subject: denial of most favored nation treatment to Yugoslavia and Poland.
It is my judgment and that of all of the senior officers of the Department concerned with this matter, that the denial of most favored nation treatment to Yugoslavia and Poland/1/ will have the most serious consequences for our relations with these countries and toward our entire position in Eastern Europe. It would run directly counter to our policy of holding out an alternative to those countries which are striving to be independent of international Communism and free from Soviet domination. It would cause the loss of effective gains we have made in projecting United States influences into Eastern Europe. It would destroy many important and identifiable pro-Western elements in those countries who, according to our best information, are in the ascendancy.
/1/On October 4, the Congress passed the Trade Reform Act of 1962 that included a provision denying most-favored-nation rights to any state under Communist control. For text of P.L. 87 - 974, approved October 11, see 76 Stat. 872. See also Document 130.
The denial of most favored nation benefits will have most serious effects on Yugoslav and Polish trade with the United States. Analysis of trade statistics with Yugoslavia indicates that virtually all of its exports to the United States would be subject to significantly higher duties. Poland has enjoyed MFN benefits only since later in 1960 and has thus only begun its efforts to develop a market here. These efforts, which have had our encouragement, would be nullified. The loss of trade with the United States, taken in conjunction with other international developments, such as the effects of the Common Market on their trade with Western Europe, may be expected to lead Polish and Yugoslav regimes to undertake a realistic, if not pessimistic, reassessment of the wisdom of their reliance on the West. We will have given them but one alternative, that of complete dependence on the Soviet bloc. We will thus have contributed much to an objective neither Stalin nor Khrushchev has been able to achieve, the unity of the Communist world.
At a time when international Communism is seeking to advance its position everywhere in the world I fail to see why we should now abandon our efforts to carry the war to the enemy. We have every reason to be greatly encouraged by events in Eastern Europe which are unquestionably running in our favor. There are innumerable evidences that in each of the countries in the Eastern European Soviet bloc there are mounting pressures for liberalization and for better relations with the West. In Yugoslavia we have a clear demonstration of the benefits of our policy. We should not be swayed from our course by public statements of old-line Communists such as Tito. We are now witnessing in Yugoslavia the gradual transference of power to younger and less doctrinaire men who are determined to hold Yugoslavia from communism itself. This is not the time for us to write off our extensive investment in this area and to ignore our vital security interest in the future of these countries. The only profit of such action would be for international Communism and Nikita Khrushchev. Dean Rusk"
Ball
67. Memorandum of Conversation
//Source: Department of State, Conference Files: Lot 65 D 533, CF 2152. Secret. Drafted by Glenn and approved in S on October 4. The meeting was held at the U.S. Mission.
SecDel/MC/79 New York, October 1, 1962, 3 p.m.
SECRETARY'S DELEGATION TO THE SEVENTEENTH SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY New York, September, 1962
PARTICIPANTS
United States
The Secretary
Amb. Stevenson
Mr. Richard Davis, EUR
Mr. Edmund S. Glenn, LS
Mr. Philip Valdes, SOV
Poland
Foreign Minister A. Rapacki
Mr. Z. Janczewski, Ministry of
Foreign Affairs
SUBJECT
Polish-American Relations in the light of the world situation
After an exchange of amenities the Secretary suggested that one of the topics of conversation might be that of bilateral relations. As the Foreign Minister certainly knows the President has had some difficulties with Congress in regard to legislation pertaining both to trade relations and to aid. It is quite clear that the attitude of Congress is to a large extent influenced by the general political atmosphere. The President bases his own policy on the belief that an improvement and a normalization of Polish-American relations should be possible in spite of existing difficulties upon which, as we all understand, neither Poland nor the United States exercises full control. The task of the President would be much easier if Poland did not publicly take a position in support of policies which create a danger to peace. At the present moment the President has made his own stand clear in spite of the political difficulties which might result from this at election time. He is trying to persuade Congress to keep the door open to the development of normal relations between the United States and Poland. Unfortunately, at the very moment when the President was doing that, Mr. Gomulka made a speech in which he supported the Soviet views about Berlin and also there were Polish expressions of solidarity with Soviet policy at a time when Soviet provocations in Cuba have reached a maximum. The difficult task of working for better mutual relations should be one for both governments and these Polish actions have not helped the United States Administration in its endeavors.
The Secretary made it clear that both the traditional friendship of the American people toward the Polish people and the personal regard of the Secretary to Mr. Rapacki, as Foreign Minister of Poland, were not at stake. The problem was that of obtaining cooperation from both sides toward the solution of current problems. He invited the Polish Foreign Minister to speak freely.
Mr. Rapacki said that this was not the first time that he and the Secretary had exchanged frank and free remarks and this mutual frankness undoubtedly has contributed to such improvement in relations as has taken place so far. It has been recognized ever since the first conversations of the Foreign Minister with representatives of the United States, back in 1956 or 1957, that a normalization of relations should be sought in full realization of there being points of disagreement between the two nations. In spite of such points of disagreement in regard to the overall world situation, the two nations could work together to maintain their traditions of friendship and develop their economic and cultural relations. The experience of the last few years has shown that such policies could lead to success and Poland intends to keep on seeking possibilities of closer relations in spite of areas of disagreement.
The Foreign Minister understands that there are certain difficulties in the United States at the present moment. He, of course, does not wish to mix in American internal affairs. However, he is somewhat surprised that the United States Government should depend to such an extent on a certain part of American public opinion, even if that part of the opinion finds its expression in Congress. There should be no necessity to depend to such an extent on a part of public opinion.
The Secretary remarked that it is equally necessary for the United States Administration to take into account American public opinion as it may be for the Polish Government to take into account the Warsaw Pact.
The Foreign Minister said that there is a great difference between public opinion and an international agreement. He may agree that there is an inter-dependence between public opinion and the actions of the government and he recognizes that the United States Government has made great efforts to improve economic relations between Poland and the United States. However, public opinion is something on which the government itself may have an influence. Thus, public opinion is influenced by a situation such as that of Berlin or Cuba, but not only by that--and in regard to the expression of American opinion through recent legislation in regard to Poland, the Foreign Minister feels that in a way it is the actions of the United States Government which have influenced public opinion, only in turn to be influenced by it.
The Secretary spoke about certain policies which endanger peace. The Foreign Minister said that this is not anything which is of Poland's doing.
The Secretary remarked that sometimes people have to bear the consequences of their partners' actions, and this even when they themselves are not fully willing members of the partnership.
Mr. Rapacki said that he felt that none of Poland's partners were endangering peace. He is certain that the President of the United States does not wish either to endanger peace.
In regard to Berlin, Mr. Rapacki said that there is one point which is particularly serious and that is the question of the presence of Western troops in that city. He was not authorized to express any opinions except his own, nor did he wish to imply that what he has to say on the subject represents anybody else's opinion. His own opinion is that the question of Western troops in Berlin is not an ``absolute question". If the situation were different in the world, the presence of the Western troops in Berlin would not appear as such a difficult problem. It is necessary to understand other people's point of view and in particular it is useful for the United States to understand how these things look from Warsaw. The situation in Berlin, and in particular the situation as it derives from the presence of Western troops there, had taken a turn for the worse after incidents such as that of the U - 2 plane and after the aggravations of the situation in regard to Cuba last April. If the relations between Cuba and the United States were based on peaceful co-existence it would certainly be easier to negotiate a solution to the question of Allied troops in Berlin.
The Secretary had spoken of Soviet provocations in Cuba. Mr. Rapacki does not see any such provocations. He knows the facts of the situation and he feels that he has learned a lot from a recent visit to Cuba. This visit leads him to believe that relations between Poland and Cuba will be quite a bit easier than expected. In this respect, he was somewhat surprised at the intervention of the United States Ambassador in Warsaw in regard to Cuba before his departure for his Cuban visit./1/
/1/Rapacki visited Cuba June 10 - 17. According to despatch 482, June 14, Ambassador Cabot had warned the Polish Government that the Cuban visit would have a damaging effect on U.S. - Polish relations. (Ibid., 748.00(W)/6 - 1462) Cabot reported on a verbal exchange with Rapacki over the Cuban visit in telegram 2155, June 26. (Ibid., 748.13/6 - 2662)
Mr. Rapacki mentioned that, although this has nothing to do with the subject of Cuba, the new Ambassador is making an excellent impression in Warsaw.
In any case, it cannot even be suspected that the purpose of Mr. Rapacki's visit in Cuba was to aggravate the tension between that country and the United States. It was, nevertheless, a very instructive visit and Mr. Rapacki would advise the Secretary to perhaps visit Cuba himself.
The Secretary said that he doubted whether he would receive an invitation. Mr. Rapacki said that he might in the future. At the present moment this is not a very concrete subject of conversation. Obviously, the Foreign Minister is not extending any invitations, and the Cubans themselves might be afraid that an invitation on their part might be interpreted as a sign of weakness. Mr. Rapacki's personal opinion about the Cubans is that they are non-conformist people--something which the United States should well know and which others are discovering now. The Cubans seek their own way and will not follow anybody's example. They certainly do not intend to copy measures which have failed elsewhere. Mr. Rapacki had found more points of agreement between the thinking of Cubans and Poles than he had expected.
Reverting to the question of bilateral relations, Mr. Rapacki said that he was afraid that the recent decision of the United States Senate might be a step backward in the development of these relations. He has read with great care both the language of the legislation and the interpretations given to it. He feels that there exist possibilities for continuing economic relations in the direction in which they are developing at pres-ent, since these relations are based on a certain number of economic principles. For example, the most-favored-nation clause is tied to certain obligations on the part of Poland; it is thus a matter of reciprocal legal obligations. This point should be made clear since a lack of clarity in this respect influences the marketplace and makes it difficult not only to develop but even to maintain trade at the present level. It should be made clear that the question of the most-favored-nation clause is not one which can be made unilaterally but is a matter of international agreement.
As for the question of repayment by Poland of pre-war bonds, it is better perhaps to leave it in abeyance until such a clarification is obtained.
The Secretary said that the President is trying to leave the door open so as to make normal relations between the two countries possible. At the end of this week it will become known what exactly is the legislative situation. The question of trade is more important than that of aid and in that respect the Executive branch of the United States Government will do whatever is possible, within existing legislation, to maintain good relations and to improve them. It is highly important in this respect to avoid tying together things which do not need to be so tied. If the Polish Government were to retaliate for any one action on the part of the United States by tying to it some other action on the part of the Polish Government--without absolute necessity--this would produce a downward spiral where from retaliation to retaliation relations would worsen.
The Foreign Minister asked whether the Secretary had in mind Congressional action.
The Secretary said that Congressional action imposes certain limitations on the possible actions of the Executive branch. It is the policy of the Administration to act towards better relations within such limitations; if, however, the Polish Government, because of some such limitations, were to take retaliatory action on its part, this might lead to a further narrowing of the freedom of action of the Administration and thus precipitate a series of retaliations and counter-retaliations.
Mr. Rapacki said that the most-favored-nation clause is tied to the payment by Poland of indemnifications for nationalized American property.
The Secretary said that he urges the Poles not to tie together any items which it is not absolutely necessary to tie together.
Mr. Rapacki said that he understood that anything which constituted a deterioration in mutual relations might lead to further deteriorations; likewise, improvements may lead to further improvements. In any case, the most-favored-nation clause should not depend on the general political situation.
The Secretary said that he wanted to speak of his personal experience of the last six months. Very much of his time was spent before Congress, including Committee meetings in Executive Session which are not reported in the press, defending the possibility of maintaining normal economic relations with Poland. Had he been a lawyer, such as his good friend Governor Stevenson, he would have said that he received very little help from his client in these endeavors.
Governor Stevenson said that the client in question certainly was absent at the time of the debate.
The Secretary said that, for example, the Polish position in regard to Berlin did not make his own position before Congress very easy.
In regard to the substance of the question of Berlin, the Secretary did wish to say that he wants to make it absolutely clear that the Allied powers are in Berlin to stay. There were opinions expressed recently to the contrary; these opinions are not only unrealistic but also dangerous. Mr. Khrushchev had repeatedly said that Mr. Macmillan, President De Gaulle, Mr. Spaak, Mr. Fanfani, and even President Kennedy, are ready to agree with him on Berlin; only Chancellor Adenauer does not want to agree. Nothing could be farther from the truth, and it is essential that everyone should be aware of that.
Passing to the question of Cuba, the Secretary would like to make it clear that there are two points which are not negotiable. One of these is the question of a political and military alliance between the Soviet Union and Cuba. The other is that of Cuban infiltration into other Latin American countries. This is something which the President stated categorically already a year ago. We are not interested in Cuban internal affairs. We are not even particularly concerned with the Cuban nationalization of American property (which, parenthetically speaking, wasn't profitable anyhow). We cannot accept, however, the establishment of a Soviet military base in this hemisphere.
Finally, in regard to bilateral relations, there are obvious difficulties, but the Administration is still prepared to do whatever it can within the context of the present situation to work for the normalization of these relations.
By the way, the Secretary prefers the expression ``normal relations" to that of ``peaceful co-existence" as the latter has become a slogan which means many things we cannot accept. Thus, the Secretary, when speaking of relations between states, governments or peoples, prefers the good, old-fashioned expression ``normal relations" which does not contain the reservations implied by the expression ``peaceful co-existence". This latter expression has been used to describe situations in which there is very little peace--there certainly is no peace in Vietnam and the Secretary is not certain whether there will be peace in Laos.
Mr. Rapacki said he agreed that peaceful co-existence was not being implemented in many parts of the world, although he might differ with the Secretary as to who is responsible. This expression has, nevertheless, great value as it means absence of war.
The Secretary said that it was described by Mr. Khrushchev himself as covering the struggle on the part of the Soviets for the imposition of their system. This is why he prefers the pre-Khrushchev and pre-Stalin expression ``normal relations".
Mr. Rapacki said that the victory of ideology should be pursued only by peaceful competition.
The Secretary remarked that Mr. Khrushchev certainly went beyond peaceful competition when he gave his blessing to so-called ``wars of national liberation".
Mr. Rapacki said that ideology is not very important if major wars are avoided. If there is no war the world will evolve in such a way--both within each of the three blocs and as to the relations between them--that none of those alive today will recognize.
The Secretary said he hopes that it will be given a chance to evolve. Poland certainly has no interest in any solution which would result in the incineration of the entire northern hemisphere.
Returning to the present situation the Secretary said that tensions would certainly decrease if there were to be a de-Stalinization of East Germany--for example (and he had said this to Gromyko), if the East German regime were to de-Stalinize and if East Germany had a regime similar to the Polish regime of today, current tensions would be greatly reduced.
Mr. Rapacki said that he would certainly hesitate to give advice to the Government of the German Democratic Republic. As a matter of fact--and what he is going to say is an example of his frankness in this conversation--one of the greatest fears the Poles had at the time of their October revolution was that the East Germans might follow their example.
The Secretary asked whether this was because of the 20 Soviet divisions in East Germany.
Mr. Rapacki replied no, that their greatest worry was how far the FRG might go.
The Secretary said he would not ask Mr. Rapacki to comment on the following but in the light of Poland's knowledge of the situation in Central Europe and the fact the German problem will not impinge directly on Polish interests, Poland should know that the presence of American troops in West Berlin is a factor of stability.
The Foreign Minister said that it would be so if U.S. policy itself were ``stabilized". Only in such a case would the presence of American troops in Berlin have a stabilizing effect. Where, however, American policy oscillates under the influence of a public opinion which gives in easily to irritation, the presence of American troops cannot have a stabilizing effect. The effect of the presence of American troops in West Berlin is tied to the entire world situation and would be stabilizing only if American policy were constant and the same in all parts of the world.
The Secretary said that the American is a strange animal: when attacked, it defends itself. Given the pressures on Berlin and on Vietnam, and the penetration of this hemisphere through Cuba, we cannot accept a stability which would be like that of a hypnotized rabbit waiting for the snake to strike.
Mr. Rapacki said that it might be good to think of what happened in Cuba. It is not ``we"--and by we the Minister does not mean Poland, but the Socialist ``camp"--who started the revolution in Cuba. It is not ``we" who isolated Cuba. If the Cubans act as they do it is first of all because they have been isolated. The Secretary certainly is aware of the fact that the Cubans requested permission to buy arms in Britain and only upon the rejection of their request did they turn toward the Soviet bloc.
The Secretary said that this was hardly the whole story. The United States certainly could not tolerate the sending of Soviet agents to other countries of the Western Hemisphere and the provision by Cuba of funds to subversive movements in Latin American.
Mr. Rapacki said that he did not wish to enter into a controversy in regard to agents, since after all it is difficult to determine whose sources of information are reliable. He repeated, however, that the Cubans acted as they did because they felt isolated and wanted to break out of their isolation. The tempo of the Cuban revolution was set not by the Chinese Communists or the USSR but by the United States.
The Secretary concluded by saying that the legislative action of Congress would become known shortly, even though the precise scope of such action is not known today. When Congress finally acts and when we know the situation, time will be needed to see what it means and what are the actual possibilities. Quiet consultations are preferred to hasty reactions. Therefore, the Secretary urged the Polish Government to avoid any hasty reaction to such legislation, whatever might be its precise terms. The Secretary expressed the hope that one day they might talk about Polish-U.S. relations in a sunny climate.
The Foreign Minister expressed the hope that it will be possible for the two countries to continue developing their friendly relations.
68. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 411.4841/10 - 1662. Confidential. Repeated to Belgrade.
Warsaw, October 16, 1962, 6 p.m.
736. Director General Michalowski invited me today to Foreign Office to present note regarding Congressional action directing abrogation of MFN for Poland./1/ Note refers to talks in Warsaw on this subject and states ``Introduction and application of restrictions in Polish-American relations would be, on part of American side, non-fulfillment of pledges, which were undertaken at time of negotiations of agreement to settle United States claims arising out of nationalization of property of American citizens in Poland . . . charge d'Affaires . . . Siscoe . . . confirmed that MFN clause would be granted after conclusion of agreement." Note continues that in point four of Raczkowski - Kohler protocol United States representative confirmed statement that granting of MFN would take place after signing agreement. ``Implementation by Poland of agreement and . . . MFN clause to Poland are inseparably tied up with each other."/2/ Note then argues that further carrying out of Polish commitments is connected to volume of Polish exports to United States. Withdrawal would not only check mutually beneficial economic relations but also unfavorably weigh on spirit of entire relationship of two countries.
/1/The text of the note was transmitted to the Department of State in airgram A - 300 from Warsaw, October 17. (Ibid., 411.4841/10 - 1762)
/2/Ellipses in the source text.
In course of conversation Michalowski pointed out that already Polish exporters are receiving numerous cancellations of orders due to uncertainty regarding date of application of MFN cancellation. He reflected obvious unhappiness of Polish Government at turn of events and desire to save what could be saved from wreckage. Polish note confirms our thought that Poles are not likely to continue paying on claims agreement once MFN is cancelled. When I gently urged restraint Michalowski pointed out that news regarding MFN cancellation had not yet been published (he was evidently unaware of General Spychalski's speech Embtel 723)/3/ but would obviously have to be. I said that I was referring to statements and acts which were of no real importance to Poland but very offensive to United States public and Congressional opinion. I said that I would say no more since I was aware that Foreign Minister Rapacki had been incensed by statement I had made to him under specific instructions.
/3/Telegram 723, October 15, reported that the Polish Minister of Defense had used the denial of MFN as an example of ``imperialist" efforts to undermine socialism in Poland. (Department of State, Central Files, 411.4841/10 - 1562)
While conversation was unhappy one it was personally cordial and there was no need to convince Michalowski that President and Department were strongly opposed to Congressional action. I intimated efforts were being considered to find some satisfactory course of action but I could give him no assurances as to what would happen.
Cabot
69. Memorandum of Conversation
//Source: Department of State, Central Files, 411.4841/12 - 662. Confidential. Drafted by Katz and approved in U on January 3, 1963.
Washington, December 6, 1962.
SUBJECT
Call of the Polish Ambassador Regarding US-Polish Economic Relations
PARTICIPANTS
The Polish Ambassador, Edward Drozniak
Dr. Marian Dobrosielski, Counselor, Polish Embassy
The Under Secretary
Mr. Julius L. Katz, EE
The Ambassador expressed satisfaction that after so many months of delay the PL 480 negotiations had finally begun. He wished to raise some general problems connected with our bilateral relations, rather than the negotiations per se, but he hoped his point of view would be taken into account before the negotiations were finalized. The past months, he said, were full of expectation, promises and disappointments. (He noted parenthetically that ``some officials" of the State Department said they had a right to be disappointed.) He realized, of course, that US-Polish relations were affected by the international situation, and that the Administration was not always able to do what it wished. Nevertheless, facts were facts and the Polish Government could not depend upon intentions and attitudes. The Ambassador said that he wished to call attention to these facts:
1. Despite a promise last December that there would be a further agreement in the early Spring, and a further promise to begin negotiations in June, nothing had happened until now. The promises of last December and June had figured in Polish planning for animal husbandry. When the U.S. did not provide grain Poland had to buy grain at great cost in order to maintain the hog population. The result was a grave deterioration in the Polish balance of payments.
2. Despite the Administration's attitude, the Congress had voted to withdraw MFN from Poland. This, together with the boycott campaign against goods of Polish origin, was producing a serious effect on Polish exports to the U.S.
3. Poland had expected to see a further development in bilateral relations with the U.S., i.e., it expected a change in the Battle Act. Today one hears nothing about this. The Ambassador noted in this connection that he came here 18 months ago to work for improved relations; now he has to work hard to maintain the status quo.
4. To the problems with the U.S. must be added problems with Western Europe, particularly the Common Market. Some 40% of Poland's trade was with the West, but because of trade difficulties and discrimination, Gomulka had recently pointed out that Poland's dependence on trade with the West would have to be reconsidered. In the past five years, Poland had lost $450 million through a working of the terms of trade. This produced a terrible strain on Poland's balance of payments.
5. Poland's agricultural situation this year was very bad. Grain production was 2 million tons less than last year, potatoes were lower by 7.5 million tons, and the vegetable and fruit crops were very bad. Poland had to import between 2.7 and 2.9 million tons of grain this year.
6. In these circumstances, Poland expected to receive a proposal from the U.S. which would recognize Poland's present situation and reflect the traditional generosity of the U.S. The U.S. offer, however, was only $37 million. Without wishing to enter into details, the Ambassador wished to point out that Poland had requested 1.5 million tons of grain. The U.S. offered 400,000 tons of wheat. Yugoslavia, he noted, had recently received 1.2 million tons of wheat. Similarly with respect to cotton, Poland had requested 40,000 tons to cover its deficit. The U.S. offered 4,000 tons.
Summing up, the Ambassador said that in one of Poland's most difficult years the U.S. made its smallest proposal and had proposed conditions (cash purchase commitments) which were beyond Poland's capacity at the present time. On the assumption that the U.S. shared Poland's desire to advance our relations, he requested:
1) A public statement by the U.S. Government indicating the intention to maintain the status quo regarding most-favored-nation treatment. This would assure American firms who were uncertain about the future of trade with Poland.
2) A public statement, preferably by the President, opposing the boycott campaign. The efforts of the Department in the form of letters and interviews were appreciated but this was not enough.
3) Efforts in the new Congress to amend the Battle Act.
4) Review by the Under Secretary of the U.S. position in the PL 480 negotiations. The Ambassador hoped that the U.S. could examine the situation not merely from a statistical point of view but from the viewpoint of the Ambassador's presentation.
The Under Secretary thanked the Ambassador for his clear and frank presentation and assured him that we wished to have good relations with Poland. There were, however, forces beyond control which limited the full possibilities. With regard to the points made by the Ambassador, Mr. Ball commented:
1) The President had indicated in a speech in Buffalo his intention to seek a change in the MFN provision of the Trade Expansion Act./1/ Mr. Ball noted that he personally had done everything in his power to prevent the passage of this provision.
/1/For text of the October 14 statement, see Public Papers of the Presidents of the United States: John F. Kennedy, 1962, pp. 782 - 783.
2) With regard to the boycott campaign, it was difficult to control the attitudes of individuals. He was not sure that an official statement would provide the answer to this problem, but said he would consider this matter further.
3) Regarding the PL 480 negotiations, Mr. Ball recalled the difficult period in the Congress on the Foreign Assistance Act which made it uncertain whether PL 480 could continue. In the circumstances we could not move faster. He indicated that he was aware of the general considerations in the negotiation but was not familiar with the details. He stated that he would review our position with Mr. Katz in the light of the Ambassador's remarks.
4) With regard to the Battle Act problem Mr. Ball noted that we tried to get an amendment, had succeeded in the Senate, but not in the House. It was pointed out that the worsening of the international situation, notably in Berlin and Cuba, was largely responsible for the failure to obtain passage of the amendment.
Invited by Mr. Ball to add any further comments, Mr. Katz observed that the Ambassador's first fact was based upon a misapprehension, i.e., that we had ``promised" that there would be a further agreement for grain in the early Spring. In fact we had agreed to consider further sales of wheat. We had considered this and concluded that we were not in a position to offer additional wheat and so informed the Ambassador at the time we signed a supplemental agreement for cotton and rice. The current negotiations were a new round, unrelated to last year's negotiations.
Mr. Ball concluded the conversation reiterating that he would review our position in the negotiations.
70. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 611.4841/12 - 1862. Confidential.
Warsaw, December 18, 1962, 5 p.m.
989. Deptel 718 December 17./1/ Please see Embtel 988./2/ Embassy sees no reason doubt urgent requirement additional grain imports by Poland this crop year. Even if figures inflated, Poles must purchase additionally at least as much wheat as we offer them. Presumably Poles would be unable purchase in Western market at terms more favorable than those normally obtained from Canadians, i.e. 10 percent down and balance in 3 years with interest rates running over 6 percent. Hence over 3-year period PL - 480 offer much more favorable to Poles even when tie-in sales included.
/1/In telegram 718, the Department of State reported that Lychowski had stated under instructions that Poland could not make any cash commitments as part of a P.L. 480 arrangement. (Ibid., 611.4841/12 - 1762)
/2/Telegram 988, December 18, outlined ways in which Poland was profiting from its manipulation of the exchange rate. (Ibid., 611.4841/12 - 1862)
However, Lychowski's instructions not to accept cash purchase commitments may well be based on seriousness present policy cash position. Embassy has no way of estimating current status hard currency reserves but believes they must be precariously low in view such desperate measures as cut in number of foreign correspondents and in foreign service salaries. If longer period were allowed for tie-in cash purchases it would perhaps show whether Polish position political or based on lack of exchange. I prefer, however, approach suggested in my Embtel 988.
Cabot
71. Memorandum of Conversation
//Source: Department of State, Central Files, 611.4841/12 - 2162. Confidential. Drafted by Katz and approved in S on January 6, 1963.
Washington, December 21, 1962.
SUBJECT
Call of the Polish Ambassador Concerning PL 480 Negotiations
PARTICIPANTS
The Secretary
Mr. Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor, Polish Embassy
Mr. Julius L. Katz, EE
The Ambassador called this morning at the invitation of the Secretary, to discuss the impasse in the current PL 480 negotiations. The Secretary said that in reviewing the background in the negotiations he found it difficult to understand why the Poles should have been surprised or shocked at our proposal for cash purchase requirements. This proposal seemed to be a reasonable one.
The Ambassador replied that there were two aspects of the US proposal which were disturbing. First, the PL 480 offer was too small and did not take into account Poland's real needs. Secondly, the cash purchase requirement was burdensome, especially at this time when Poland's balance of payments was so seriously strained. The Ambassador elaborated on this point as he did in his meeting on December 6 with Under Secretary Ball,/1/ and presented to the Secretary the attached Memorandum/2/ explaining the Polish position. He added that as a former banker he could not advise his Government to take on the cash purchase obligations since he saw no possibility of meeting these obligations.
/1/See Document 69.
/2/Not printed.
In commenting, the Secretary said that he wished to put aside any thought whether this problem was being considered from a sympathetic or hard point of view. As a former banker, the Ambassador should appreciate our situation. We were in effect offering some $60 million of commodities on terms of about one-third in cash and the balance over forty years. These terms, the Secretary thought, were considerably more favorable than what the Poles obtained elsewhere. Pointing out that the US also faced a serious balance of payments problem, the Secretary said that we found it most difficult to be in the position of subsidizing Polish purchase of commodities elsewhere. Moreover, we had to be careful that we were not subsidizing Polish exports of animal products in competition with our own. The Secretary emphasized that the unwillingness of the Polish Government to assume any cash purchase obligations made it very difficult for us to conclude an agreement. He therefore urged the Ambassador to seek new instructions.
The Ambassador said that the US view had been reported not only by cable, but Deputy Foreign Minister Winiewicz had personally carried back to Warsaw information on the negotiations. In view of the absence of any significant change in the US position he did not believe Warsaw would provide new instructions.
The Secretary suggested to the Ambassador that if he felt he could not seek new instructions, he send a letter to Foreign Minister Rapacki stating that the Secretary wished the Foreign Minister to review the problem in the negotiations. The Secretary emphasized that he was not soliciting a counterproposal, since he could not hold out any prospect that such a proposal would be accepted. But there was no reason why we could not continue to exchange views in order to find a solution to our problem. There might be other ways to solve our problems. Why, for example, couldn't the Poles seek some relief from other creditors, pointing out the contribution the US was making in its very liberal credit terms. The Ambassador hastened to say that to do so would destroy Poland's credit. But the Secretary pointed out, the Ambassador had impaired Polish credit here by saying that they are unable to accept cash purchase obligations. The Ambassador coughed nervously and muttered something about the difficult situation in which Poland presently found itself.
In concluding the meeting, the Secretary reiterated his request that the Ambassador ask Mr. Rapacki to review the problem from the viewpoint of the trade problems of both sides.
72. Memorandum of Conversation
//Source: Department of State, Central Files, 411.4841/12 - 2662. Confidential. Drafted by Katz and approved in S on January 7, 1963.
Washington, December 26, 1962.
SUBJECT
Call of the Polish Ambassador Concerning Polish PL 480 Negotiations
PARTICIPANTS
The Secretary
Mr. Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor, Polish Embassy
Mr. Julius L. Katz, EE
The Ambassador stated that he had conveyed the Secretary's remarks to Foreign Trade Minister Trampczynski and to Foreign Minister Rapacki./1/ Mr. Rapacki had requested the Ambassador to express his gratitude that the Secretary had taken the time personally to interest himself in the negotiations. He also asked the Ambassador to convey to the Secretary his best wishes for a Merry Christmas and a Happy New Year. Both Ministers, the Ambassador continued, had reviewed the negotiations and after careful study had concluded that it would be possible to rearrange certain plans so as to assure the availability of some hard currency for agricultural purchases in the US. The Polish delegation had received instructions which go quite far in this respect. The Ambassador expressed the hope that the Polish request could again be carefully considered with the view to changing the proportion between the US offer and the cash purchase requirements. The Polish delegation would be in touch with the US side on Thursday, December 27.
/1/See Document 71.
The Secretary thanked the Ambassador for the greetings from Mr. Rapacki and stated that he would personally review the US position after the new Polish proposal had been received. The Secretary pointed out that there was one element in his mind which he had not mentioned earlier but of which the Ambassador should be aware, that is the relationship to the MFN problem. If the PL 480 agreement were on a good solid businesslike basis, it would be helpful with respect to the MFN problem.
The Ambassador stated that there was one more comment Mr. Rapacki had made. He expressed deep appreciation that the Secretary had stressed the economic aspects of the agreement. The Ambassador drew attention to the fact that following the Congressional storm of last summer the Polish Government and press did not react despite the many harsh words used in the Congress. In this connection, he asked the Secretary to use his influence to see to it that this transaction not be used to harm Poland's relations with the Soviet Union.
The Secretary observed that he and the Ambassador had discussed this matter before. He had also discussed it with Mr. Rapacki in Geneva./2/ We wished to develop our relations with Poland to the maximum extent possible, without regard to other issues which were not entirely within the control of either Poland or the US. Within certain limits, which we hoped will broaden, we could do that. At times, however, this might not be possible. The Secretary had discussed this frankly with Mr. Rapacki and pointed out that if Poland became intimately involved with the most difficult aspect of certain serious problems, e.g., Berlin, the limits of possibility would be narrowed. We, of course, had certain domestic problems which caused things to be said which might better be left unsaid. But we would try to be careful to take into account to the extent possible Polish sensibilities. The basis for our improving relations lay not in reconciling the ideological differences between us but in the enduring friendship between our two peoples. We should try to avoid the ideological problems and to stress those areas where we could broaden our relations. It should be recognized, however, that we both had our political problems.
/2/See Document 55.
Concurring with the Secretary's remarks, the Ambassador stated that he appreciated the problems. We are realists, he said.
73. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, 411.4841/1 - 1163. Secret.
Warsaw, January 11, 1963, 3 p.m.
1071. Personal for Secretary from Ambassador. In view personal interest you have shown in PL - 480 negotiations with Poles I am taking liberty of setting forth my views regarding them.
I am disturbed by increase in our new PL - 480 proposals to Poles from 37.1 million dollars to 51.6 million together with lessened purchase requirements in view of absence of adequate quid pro quo. I do not think that US-Polish relations have improved in past year. In some respects such as MFN this has been our fault but for most part this has been deliberate choice of Polish Government, i.e., repeatedly expressed Polish position on Berlin, Rapacki visit to Cuba, refusal to accept Glenn capsule and Medicine-USA exhibit et cetera./1/ On record we have certainly no reason to reward Poles for any cooperation they have given us.
/1/The Polish Government had delayed granting permission for the display of the Glenn capsule, and the United States withdrew its offer. During the exhibition, U.S. officials repeatedly protested against police surveillance and harassment of U.S. delegation members.
We must bear in mind that any PL - 480 sales are ipso facto help given to member of Soviet bloc and must therefore be justified by other positive considerations. We recognize that PL - 480 can be properly and effectively used to increase sales of agricultural products. Although agricultural surpluses mean relatively little to United States, their receipt is vital to Poland and its plans for industrial development. I do not believe we should accept Polish view that criterion should be Poland's commodity needs but should rather think in terms of how we can best further our policy objectives in our relations with Poland. Unless we keep Poles on short leash we lose leverage which PL - 480 sales provide us.
I do not understand how Poland can undertake to repay us for additional $50 million worth of commodities if it is frankly unable to assume responsibility for paying a lesser sum of defaulted bonds. I am concerned that there is no end in sight to process of providing Poland with PL - 480 commodities and this might ultimately lead to default.
It is possible Poles are so short of foreign exchange that they cannot buy grain they need, but it is to be remembered that they have been buying from other markets on relatively short credit terms. If they must purchase grain they can probably secure exchange for it by curtailing plans for industrial development. I believe the Poles are in more urgent need of grain imports now than they have been for past several years and will accept best terms they can get. I have distinct impression that Poles feel confident that we are so wedded to our ``special Polish policy" that we can always be pressured into meeting their needs despite lack of Polish cooperation in furthering bilateral relations or Polish willingness to grant adequate quid pro quo in negotiations.
I have from time to time and most recently in Embassy telegram 988 of December 18/2/ suggested other quid pro quos which we might request. (Incidentally, Department apparently has mistaken impression free market grain purchase discussed in Embassy telegram 988 is insignificant whereas fact is substantial quantities are purchased by the state on the free market.) Since offer described in Department telegram 766/3/ has been made, it cannot of course be withdrawn. If not accepted within reasonable time, however, I see no impropriety in making alternative offers involving other benefits to United States objectives.
/2/See footnote 2, Document 70.
/3/Telegram 766, January 3, outlined U.S. proposals for further discussions of a P.L. 480 agreement. (Department of State, Central Files, 611.4841/1 - 363)
I am anxious to know policy considerations under which it was decided to increase our original offer by almost 40 percent since I am concerned lest we use too much carrot and not enough stick. However, whatever misgivings I may have it is obviously essential that any discussions with Polish officials here be closely attuned to those in Washington and I should therefore be grateful for any policy guidance you may wish to send me.
In conversation with Winiewicz today I referred to very favorable offer we had made. He was noncommittal.
Cabot
74. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 411.4841/1 - 1163. Secret. Drafted by Wortzel, cleared by Tyler, and initialed by Rusk.
Washington, January 19, 1963, 5:43 p.m.
841. For Ambassador Secretary. Embtel 1071./1/ I appreciate expression of your views re PL - 480 negotiations and agree with implication your remarks that this instrument should be used with care and attention to what US may derive from its use.
/1/Document 73.
In case of Poland, more than in number of other countries receiving PL - 480 assistance, political factors and considerations transcending bilateral relations play major role in decisions re PL - 480 agreements. At same time, economic considerations are weighed carefully, including effect on US market, markets of third countries, and extent of contribution to Bloc economy. Further, we cover smaller portion of Polish deficit than of many other recipient countries, and agreements with Poland unique in requiring repurchase local currencies.
Policy which US has pursued toward Poland admittedly involves risks and limited evidence of realization of long-term objectives. I am satisfied, however, that policy remains valid under present circumstances and that essential line should continue. Desirable that we not shift ground at this time of flux in Communist world lest this have undesired effect in decisions which Poland or others might make as result. Desirable also that we not provide further impetus beyond difficulties re MFN and boycott campaign for unfavorable development Polish policy or actions.
In so far as consistent with this approach, we have sought to limit PL - 480 deliveries to minimum which would meet our objectives. Since 1960, quantities have decreased materially and terms changed to require greater commercial purchases. At same time, we have held off agreements to indicate displeasure with Polish actions, for example concerning Berlin. However, as long as we continue to regard agreements as useful, it is necessary to stop short of reductions or restrictions which would make agreement impossible. I recognize that this difficult to determine and that judgments are made on subjective basis and consequently are always open to argument. Each decision has represented consensus here as to best arrangement in circumstances.
Recognizing limits on what we expect in short term by way of favorable changes in Polish policy or bloc actions as well as fact that PL - 480 agreements not seen as permanent fixture nor as without drawbacks, I believe we should continue review use PL - 480 in light future developments.
Rusk
75. Telegram From the Department of State to the Embassy in Poland
//Source: Department of State, Central Files, 611.4841/1 - 2263. Limited Official Use. Drafted by Katz and cleared by Vedeler.
Washington, January 22, 1963, 5:07 p.m.
848. PL 480 meeting called by Poles yesterday after more than two week unexplained delay. Poles indicated general acceptance US offer January 3 but asked whether US could not agree (1) switch 100,000 tons wheat to feed grains and (2) permit half of value cash cotton purchase (estimated $3.5 million) be switched to feed. Request explained by critical need feed grains and easier availability wheat on world market on credit terms. US representatives referred previous statements on impossibility financing feed grains for Poland under PL 480. Confident US response would be negative. We intend confirm negative response later this week./1/
/1/The Department of State turned down the Polish request at the January 24 meeting of the U.S.-Polish negotiating teams. Minutes of that meeting are ibid., 411.4841/1 - 2463. The Polish Delegation accepted the U.S. offer on January 29. The text of the agreement was transmitted to the Embassy in telegram 889 to Warsaw, January 29. (Ibid., 611.4841/1 - 2963)
On separate private basis Lychowski stated he had instructions ``undoubtedly from very high sources" to request inclusion in PL 480 agreement or in associated agreement credit to purchase 500,000 automobile tires of assorted sizes for use horse-drawn peasant carts. Obviously embarrassed Lychowski stated he obliged make request but did not wish do so in plenary. Department representatives stated that Lychowski could easily guess the answer, viz., tires not eligible under PL 480 and no other financing available.
Rusk
76. Letter From the Ambassador to Poland (Cabot) to the Deputy Assistant Secretary of State for European Affairs (Davis)
//Source: Department of State, Polish Desk Files: Lot 68 D 3, Official - Informal. Confidential; Official - Informal.
Warsaw, February 13, 1963.
DEAR DICK: I enclose herewith a memorandum prepared by Pic Littell/1/ with regard to the road blocks the Poles have been throwing in the way of our cultural program. Whereas I think the other side of the story should be borne in mind also, it does seem to me clear that there is a good deal of quiet sabotage of our cultural program in Poland.
/1/Not printed. It summarized Embassy difficulties with the Polish Government.
I realize that the Department is not willing to tie this matter up with PL - 480 and I am not inclined to quarrel with that decision. I do think that, in any case, better tactics are open to us. It would seem to me that when we get tripped on hurdles such as those mentioned by Pic we should squawk as loudly as we can and as, in point of fact, we on several occasions have. Then when the Poles come around again for PL - 480, which I confidently expect they will have to, I think that we might make a distinctly modest offer to sell them PL - 480 commodities in the amount say of ten to twenty million dollars, the exact amount to be determined by the degree of cooperation they have shown in the preceding year. (Of course if they had really been cooperative I would increase the amount.) I would attach no strings to this other than publicity--in other words, I would make it so attractive in so far as it goes that they would not wish to turn it down even though they would be disappointed in its amount. Then when the Poles come storming in as they did this year and say we were not giving them anything like what they needed I would recount to them sweetly their lack of cooperation during the year, and say that under the circumstances this was all we were disposed to offer. I would trust that these tactics would convince them that cooperation is a two-way street.
There are a number of other things which I have mentioned to the Department in the course of the year I have been here, but have received no satisfaction. I continue to feel that I should be instructed to discuss them with the Poles. These include such matters as the outrageous ground rents they charge us for real estate (the Embassy residence property and the school land being horrible examples), the arbitrary rents they have imposed on us, and the discriminatory exchange rate (a Pole can get 72 zlotys for his dollar and an American only 24).
As it appears unlikely that anything will be done to change the Ellender amendment,/2/ I suggest that serious consideration be given to raising the exchange rate problem with the Poles prior to any further PL - 480 discussions. I am not at all convinced that we pressed this issue with sufficient vigor prior to the 1961 agreement and the record is clear that nothing has been done about it since. This is an issue of major significance which has direct relevance to PL - 480 sales. (For a recent discussion of this issue you may wish to read Embassy airgram 628 of February 8, 1963.)/3/
/2/The Ellender amendment to Title I of the Foreign Assistance Act of 1961 reduced the borrowing authority of the DLF for 1963 - 1966. For text of P.L. 87 - 195, approved September 4, 1961, see 75 Stat. 426.
/3/Airgram A - 628 reported on Polish press coverage of the P.L. 480 agreement. (Department of State, Central Files, AID (US) 15 - 4 Pol)
I do think that in our relations with Poland it is always important to keep the door firmly open and on that account would not wish to press the Poles on PL - 480 to the point that they turned down our final offer. I do believe that we should extend cooperation to them, provided there is some relation between the cooperation we extend to them and that that they extend to us. On the other hand, I think it is very important for us to bear in mind the fact (and it comes out time and again by implication in their own official statements) that our cooperation, notably our PL - 480 agreements, are giving them very real help in developing the country's economy--and after all, Poland is a staunch member of the Warsaw Pact. Therefore, much as I believe in keeping the door open, I do not think we should be over generous. I do, incidentally, believe that we should play square with them and continue to feel that we should maintain MFN for them on both moral and practical grounds.
In connection with the thoughts I have expressed in this letter you might wish to read my Airgram 519 of March 15, 1962/4/ and Despatch No. 359 of March 22, 1962./5/
/4/Airgram A - 159 forwarded recommendations for exploitation of the P.L. 480 agreement. (Ibid., 611.48/3 - 1562)
/5/Despatch 359 reported on Polish rent ``gouging" of the Western diplomatic corps. (Ibid., 121.485/3 - 2262)
Sincerely yours,
Jack
77. Memorandum of Conversation
//Source: Department of State, Central Files, POL Pol - US. Confidential. Drafted by Wortzel on February 21 and approved in S on February 28. The meeting was held in Secretary Rusk's office.
Washington, February 20, 1963, 11 a.m.
SUBJECT
US-Polish relations; East-West issues
PARTICIPANTS
Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor of Polish Embassy
The Secretary
EUR/EE--Arthur I. Wortzel
Ambassador Drozniak opened the conversation by expressing his gratitude to the Secretary for his important assistance in achieving conclusion on February 1 of the PL - 480 agreement with Poland./1/ He said that this was a good and useful agreement and particularly timely in view of the bad crop which Poland had had in 1962 and the severe winter, which had already affected transportation and industrial production and which would affect agricultural activities next spring.
/1/For text of the agreement, signed in Washington on February 1 and entered into force the same day, see 14 UST 803.
The Secretary thanked the Ambassador for his remarks and added that he had derived personal satisfaction from the conclusion of the agreement.
Drozniak said that he was returning to Warsaw February 26 for consultation and that he would like to be able to report to Polish officials, particularly to Foreign Minister Rapacki, concerning the attitude of the US Government on matters of importance to Poland. He wished, therefore, to pose two questions. The first had to do with the US Government's view of the perspectives for 1963 concerning major international questions such as the situation in Berlin and Germany and a nuclear test ban and disarmament, including the Rapacki Plan.
Looking at the general international situation, the Secretary replied, we believe that 1963 is a year in which it might be possible to work out agreements which may reduce international tensions. As for cessation of nuclear testing, we want to conclude a test-ban treaty and are disappointed that the USSR has not thus far made it possible to work out an agreement. To us, the key is to obtain adequate assurance that a test ban will be respected. We can understand that the Soviets may not feel that they require on-site inspection in the US, the nature of our society being such that a combination of 98% open observation and 2% espionage can meet their requirements. We, however, are faced with a large area not accessible to us. We thus have a difference between us not only of policy but of fact.
We have, in the face of a difference as to the number of on-site inspections required, proposed that we put the issue of numbers aside and settle the rest of the treaty, leaving President Kennedy and Chairman Khrushchev possibly to settle the numbers question once we know what the numbers really mean in terms of treaty provisions. The Soviets have refused, and acted in a way which suggests a move toward an uninspected moratorium. We have had much experience since 1945 with the difference between agreement in principle and an actual agreement.
The Secretary asked Drozniak to tell Minister Rapacki that we want very much to have a test-ban treaty, that we are prepared to believe that the Soviets also wish a treaty, and that we will continue to work hard toward reaching agreement.
Turning to Berlin, the Secretary said that the key factor remains the presence of Western forces, this not being negotiable. We believe that relations between the parts of Germany and between Germany and Europe can become more normal. We expect that there will be discussions with the Soviets and we will see what happens. We see possibilities of progress, but it will take patience, care and time. Asked by Drozniak whether the Soviet proposal concerning a UN presence--the UN flag--in Berlin did not offer a solution, the Secretary commented that we have indications that this is not all the Soviets have in mind, and that their statements on this subject have not been consistent. Although we have not taken the matter up on an inter-allied basis, we think it possible that a UN presence which would insure a lessening of tensions throughout the Berlin area might be a solution.
Concerning denuclearization, the Secretary said that this must be considered in the total framework of disarmament and basic issues in Europe. In a sense, he said, technology has overtaken the Rapacki Plan. If the area proposed were denuclearized, the Soviets would still have a massive capability. We thus now face technical problems which make the idea of zones doubtful.
The Secretary then said that there are other problems which concern us--for example, Laos. We are disturbed by the lack of cooperation on the part of the Pathet Lao with the Royal Laotian Government. We support Souvanna Phouma and know that cooperation between him and Phoumi Nosavan is good, but that there is tension between Souvanna and the Pathet Lao./2/ It is extremely important that the coalition succeed, it being a test case of a personal agreement between President Kennedy and Chairman Khrushchev. It is in the interests of both sides that Laos be let alone. We have no influence with the Pathet Lao, and hope that those who do will use it to prevail on them to support the coalition.
/2/Souvanna Phouma, Prime Minister of Laos, and General Phoumi Nosavan, leader of the Laotian right wing. In August 1962 the factions involved in the Laotian civil war, including the Communist Pathet Lao, had attempted to carry out an agreement for the withdrawal of foreign involvement and the peaceful settlement of their differences. The settlement soon broke down.
The Secretary commented that the role of Poland as a member of the International Control Commission in Laos is important and that Poland has a heavy responsibility. If there is not freedom of movement in Laos, we must suspect what is going on. We hope that Minister Rapacki will think about the implications of the ICC's acting in a way to reduce suspicion. The Secretary added that we are not happy about an inspection of Air America if many other things going on are not inspected.
Thanking the Secretary for his exposition, Ambassador Drozniak posed his second question. What, he asked, does the Secretary see as the prospects for our bilateral relations. The Poles are very much interested in developing our relations in all fields. He was concerned at this time with our economic relations and wondered what the chances were for reversing Congressional action concerning most-favored-nation treatment for Poland, for amendment of the Battle Act, for ending the boycott of Polish goods in the US, and for future agreements under Public Law 480.
The Secretary said that he would like to be completely frank, because it is important that we understand each other. We are interested in improving our bilateral relations. This is so for many reasons, including the long history of ties between our countries. We are interested despite the fact that Poland pursues policies in matters of importance to us which we find disagreeable. However, we try to understand Poland's special situation including its geographic location. If Poland were located elsewhere and pursued its policies, our relations would be bad, but we take into account our understanding that Poland does not have full control of its own situation.
Unfortunately, the US public and Congress do not have the same understanding of Poland's situation. The Secretary asked Drozniak to express to Minister Rapacki his appreciation for Rapacki's understanding of our problems as we try to understand Poland's.
Concerning MFN, the Secretary said, the President has made his position and his intention clear. The Secretary added that he was not at liberty to discuss tactics and that he could not guarantee success, but that if the general atmosphere is favorable, he would be hopeful.
The Secretary said that there are other things we might do to help our relations. We should press ahead in the field of exchanges. We hope that we can improve the channels of trade, although our role in that respect is limited by the nature of our economic system. In general, we would like to steer the boat of our relations in a favorable direction, but the waters are sometimes choppy.
In response to a further question concerning how we see the future of US-Polish PL 480 agreements in general, the Secretary noted that it had been possible to conclude an agreement recently and believed that in the absence of a change in the situation, there was no reason why we could not have another look later.
Ambassador Drozniak said that he wanted to express his thanks for the Department's active help with regard to the boycott of Polish goods in the US and the threatened ILA boycott of Polish ships.
78. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, POL Pol - US. Confidential. Repeated to Belgrade.
Warsaw, April 1, 1963, 3 p.m.
1518. Department telegram 1174./1/ At lunch which I gave Ambassador Drozniak's honor March 30 he described his call on Representative Mills in approximately same terms as outlined memcon his conversation Under Secretary Ball February 25./2/ Said Mills told him he would support return MFN treatment to Poland and that his previous objection had been based primarily on Department's granting MFN without proper legislative authority. Assume Department has checked Drozniak's story with Mills. Would be interested hearing if Mills change of heart is as real as Drozniak appears to believe. Drozniak also told me his meeting two weeks ago with Gomulka, with whom he claims close association dating from war years, lasted three hours. Said believed Gomulka now has better understanding of strength of Congress in foreign policy formation.
/1/Telegram 1174, March 30, reported that President Kennedy would seek amendment of the 1962 Trade Act to restore MFN status to Yugoslavia and Poland. (Ibid., FT 4 US/IEA)
/2/Not printed. (Ibid., POL Pol - US)
/3/In telegram 1199 to Warsaw, April 4, the Department of State reported that Mills had informed the White House that he would not actively oppose changes in MFN status of Poland and Yugoslavia. (Ibid.)
Cabot
79. Memorandum of Conversation
//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Tims on April 22 and approved in S on April 24. The meeting was held in Secretary Rusk's office.
Washington, April 20, 1963, 2:30 p.m.
SUBJECT
US-Polish relations; East-West issues
PARTICIPANTS
Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor of the Polish Embassy
The Secretary
EUR/EE--Richard W. Tims
Ambassador Drozniak opened his remarks by saying that during his recent five-week visit to Poland he had conveyed the Secretary's greetings to Foreign Minister Rapacki, who wished him in return to thank the Secretary. He said that the Foreign Minister was still recuperating from his recent heart attack./1/
/1/Rapacki suffered a heart attack on February 20.
The Ambassador went on to say that he had had an opportunity to discuss Polish-United States relations with many ranking Polish officials, including Prime Minister Cyrankiewicz and Party First Secretary Gomulka, and that they had listened carefully to what he had to report from Washington, knowing that he had just come from having talks with a number of high United States officials, including the Secretary. In this connection the subjects that had interested the Polish leaders most included the questions of disarmament and Germany, as well as specific matters of US-Polish bilateral relations.
The Secretary interjected apropos of this that we had been particularly interested in recent progress made in Polish-West German relations, of which the long-term trade agreement between the Federal Republic and Poland was the prime evidence. The Ambassador replied that the latter was evidence of the Polish Government's readiness to try to achieve a normalization of relations with the Federal Republic. He added that his Government was concerned, however, over the general lack of progress in the field of disarmament and settlement of related issues.
Concerning bilateral US-Polish relations, the Ambassador said that he had discussed these in detail with his Government and was glad to say that the latter had confirmed his mission of pursuing a policy of practical coexistence in all fields. This was equally true, he said, with regard to cultural exchanges, scientific exchanges, and economic relations with the United States. He mentioned that the Polish Minister of Health had accepted an invitation to visit the United States and was looking forward to coming soon.
Concerning specific economic relations, Ambassador Drozniak went on to say that Poland would like to develop these relations on the basis of normal trade. He said that there was concern in Poland, however, over the fact that the question as to whether the United States would continue to give Poland most-favored-nation tariff treatment had not yet been decided. He was still in Poland, he added, when President Kennedy sent his message to Congress recommending restoration of most-favored-nation treatment to Polish imports, in connection with the Foreign Aid Bill,/2/ and this message had been received with satisfaction among the Polish Government, as had the Secretary's own statements on the subject at Congressional hearings. The Ambassador said he would be grateful if he could hear the Secretary's comments on this problem. He also said that he had reported to his Government in a quieting manner concerning the current boycott of Polish goods in this country as well as the prospective longshoremen's boycott of Polish shipping, saying that he saw hopes that these problems would be solved.
/2/For text of President Kennedy's message on MFN, see Public Papers of the Presidents of the United States: John F. Kennedy, 1963, pp. 294 - 303.
Turning to the economic situation in Poland, the Ambassador said that he had been concerned about it before he returned to Poland and that he had found it very bad owing to a severe winter and poor crops. For this reason, he said, Poland would be very glad if it could enter into a new agreement with the United States again this year, regarding purchase of surplus agricultural commodities, and would be happy to have this in the form of a mixed agreement as before, with both credit and cash purchases included, an arrangement that appeals to the Polish Government. He asked the Secretary whom he should first approach on this matter.
The Secretary replied that the Ambassador should take this up with Assistant Secretary Tyler. With regard to the most-favored-nation question, he said that the Administration had been in touch with members of the Congress and that it was his impression that if the general situation remained relatively calm the chances were good that the President's proposals would succeed. This, he added, was not because there had been an increase of enthusiasm among Congress members for the proposals, but rather because some of the opponents of trade with Poland might remain silent. The Secretary said that he was moderately optimistic on this score.
80. Airgram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, POL 1 Pol - US. Confidential. Drafted by Cabot, Sherer, Buell, Donnelly, and Davis. A notation on the source text reads: ``Discussed with Amb. Cabot at Dept. 5/15/63."
Warsaw, April 25, 1963.
A - 873. Subject: Poland--Basic Policy. What are we trying to do in Poland?
It seems to me that our basic purpose is to keep our foot in the door and our shoulder against it. We want to have contacts with the Poles, to make them feel our presence in Poland, to tempt them to try a somewhat independent line toward the Soviet Union, to maintain Poland's Western cultural orientation, to make it more difficult for the Polish regime to be too harsh toward the Polish people, to underscore our traditional friendship and links with the Polish people. We want the Polish regime to realize that it can open the door further if it wants: it is not totally dependent on the Soviet Union and if it wishes better relations with the United States it can have them and benefit from them. We must engage the Poles on as many fronts as possible: tourism, publications, radio broadcasting, cultural presentations, consular relations, travel grants, trade, social gatherings, English teaching, cultural centers, CARE programs, films, public appearances, libraries, schools, hospitals--in any area of contact that we can keep open. To take a trivial example, it is surprising to note the interest stirred up in any Polish town when the Ambassador's American car shows up with the American flag flying. Our opportunities in Poland are matchless in the Soviet bloc and despite some setbacks we have a good many successes to our credit. We must recognize, however, that since the heady days of 1956 the general trend has been for the Polish authorities to tighten the screw over Polish nationals rather than loosen it further.
We must not fool ourselves as to what we can accomplish. We are not going to change the essential character or orientation of the regime. It is going to remain communist and it is going to maintain its adherence to the Warsaw Pact. If it differs from other communist regimes in its agricultural policy, its treatment of the church and the relatively greater freedom it gives its citizens, this is not primarily because of United States policy--it is due to domestic considerations. Important as it is for us to take Poland's special position and interests into account, it is unlikely that we can induce Poland to adopt markedly more favorable policies from our viewpoint no matter what we do. There is even considerable question as to how far we might induce the regime to adopt less favorable domestic policies if we ourselves were harder nosed in our dealings with it. In short the communist regime in Poland is going its own way in accordance with its own concepts of its interests. If from time to time it adjusts its course somewhat to take our views and interests into account this is primarily to get what it can out of us; we should emphatically not deceive ourselves that there is anything really significant in it. All that we can hope to accomplish in the foreseeable future is to influence individuals, to create a favorable atmosphere, to chip away at the crudities of communist dogma.
The principal instrument for implementation of our policy today is PL 480. Poland depends heavily on its ability to get grain and other agricultural commodities from us on what in effect are extraordinarily cheap long-term credit terms. The zlotys which it deposits in payment for our commodities, though nominally subject to withdrawal, are not going to be except in infinitesimal amounts, and the regime knows this. Most of these zlotys will simply remain in Polish banks until, in ten to forty years, they are due for reconversion into dollars. It is to be borne in mind that these zlotys so far as the Polish Government is concerned are therefore really nothing but an entry in a ledger. Moreover when commodities are distributed to ultimate consumers, the return flow of payments is deposited in currency. That currency can be used either to fight ever-threatening inflation by sterilization or for new credit operations. In a capitalist economy that would be a great advantage. The economic section of the Embassy argues that in a communist economy it is not, since the government always has the totality of the nation's resources, human and material, at its disposal in any case. Be that as it may, there is another point which is indisputable. Since there is no interest payable either on the zlotys or on the dollars into which in due course they are to be reconverted, the real value of what we are paid is a great deal less than the nominal value. At the interest rate the United States Government pays on its long term obligations, dollars payable, in an average of 25 years in the future, are worth only a fraction of what dollars payable today are worth--and this takes no account either of probable inflation or of the possibility of default by the Polish Government. The benefit of all this on the $477,000,000 of agricultural commodities we have sold to Poland under PL 480 accrues to the Polish communist regime. It is no trifling benefit, but just so much help to the regime to achieve its economic objectives. In other words, if we are to extend material help which importantly strengthens the communist bloc we should be very certain that what we are receiving in return is worth as much to us as what Poland is getting.
Although from our viewpoint these agricultural commodities are surpluses, from the Polish viewpoint they are vital to the country's economy. If they were not to receive them, it would be necessary for the regime to tighten the belt to the point where it would really pinch. It is clear that even with all the help Poland has received from PL 480 its economy is seriously strained. Foreign exchange reserves are very low and perhaps nonexistent. The exceptionally cold winter has caused breakdowns in a number of sectors of the economy. It is to be remembered that our agricultural commodities supplied to Poland have not only helped to save Poland foreign exchange but also (by providing feed for hogs, hens, etc.) have contributed importantly to Poland's foreign exchange earnings. The importance of PL 480 supplies to Poland is clear from many Polish statements.
Recognizing the inherent limitations on what we can hope to accomplish I question whether it is necessary to enter into such large PL 480 agreements with Poland as we have customarily signed. Presumably we have signed these large agreements because of other benefits which we have secured in addition to keeping the door open. These include such matters as the settlement of our claims, tie-in sales, etc. It was perhaps the Department's thought in raising the amount we offered the Poles in the last negotiations that this was to mitigate the blow to our relations which had been caused by Congress' action with regard to MFN.
In implementation of our PL 480 policy one point we must bear constantly in mind is the burden these agreements are going to place on the Polish economy in years to come. Repayments under the PL 480 agreements in dollars will start in 1967 and will rapidly build up as repayments under one agreement after another begin to come due. It is somewhat doubtful whether the Polish economy can bear the strain of these repayments, particularly if Polish exports to the United States are prejudiced by Congress' action with regard to MFN, by John Birch boycotts of Polish goods and by similar measures. Presumably, therefore, it must be our policy to phase out further agreements in due course. Every new agreement adds to the hurdles which the Polish economy will have to surmount in the not too distant future. The time may come, it may indeed already have come--when it will be impossible for the Polish economy to surmount the hurdles before it. Tempting though it may be at that point for Poland to default, their record suggests that they will seek to avoid this way out of their dilemma. Yet if we continue to sign large PL 480 agreements over an extended period default might become unavoidable. At that point we would face the unpleasant alternative of stretching our already generous interest-free terms over a yet larger period or of losing much of the good will we had so carefully built up over the years. Indeed, if and when we stop signing new agreements and the Poles find they must make heavy payments on old debts while securing no new benefits, they probably will not like it. In short, we do not want our policy to be self-defeating.
We cannot afford in our relations with Poland to take the attitude that sufficient unto the day is the evil thereof. It would almost certainly be unwise to stop abruptly our series of PL 480 agreements with Poland. On the other hand, it is essential from our viewpoint as well as that of the Poles that Poland become more nearly self-sufficient in the near future, at least in the commodities the country can produce. It is thus the essence of good policy to cut down in the future on the size of any PL 480 agreements we may sign. If we continue to sign modest sized agreements covering, say, particularly cotton, which Poland cannot produce, we can perhaps postpone a crisis indefinitely. If we continue on our present course we are simply looking for trouble.
What are we going to expect in return from Poland?
We cannot expect specific political concessions. The Poles obviously are not going to, and indeed cannot, accept such conditions. We can perhaps expect as a consequence of further agreements that we will accomplish in modest measure the intangible objectives mentioned in paragraph one but this would be because the Polish authorities acquiesced in it rather than through any agreement between our countries. It is simply not realistic to expect any specific political concessions.
There are a number of economic concessions which we might ask. The most important is perhaps a bond settlement, since the outstanding prewar bonds of Poland remain in total default. Unfortunately, the Poles to all appearances do not now have the foreign exchange to undertake a bond settlement and, as explained in the previous discussion, there is no strong reason to suppose they are going to have resources to undertake a bond settlement within the foreseeable future. Possibly we could secure a bond settlement by offering a large PL 480 agreement, much as we obtained the claims settlement in 1960. We should continue to press for a bond settlement but should not be unduly rigid in how we propose to secure one.
Another concession which we have asked in the past and could with propriety ask again in the future is that they make commercial purchases of American agricultural commodities concomitantly with the purchases they make under PL 480. This helps us to dispose of agricultural commodities and to that extent is beneficial. I do think, however, that we have more important objectives than this to attain in our relations with Poland. The amount of commodities we thus dispose of is not very large and it would seem to me that if we wanted to sell farm products to Poland on a commercial basis it would be wise to go about doing this by clearing away any legal and practical obstacles to commercial sales rather than by making such sales a condition in future PL 480 agreements. There is surely no reason why we cannot compete both in prices and credit terms with other sellers of agricultural products in filling Poland's large import requirements above her PL 480 purchases. What we do want to remember is that the extra commodities we sell them under PL 480 in order to make the whole transaction, including tie-in sales, attractive, are really important help to Poland's economic development. I doubt it is wise to do this in order to pocket a few dollars.
In our relations with Poland we are constantly being annoyed by petty holdups. The deposit rate we can obtain, for example, is only 24 to 1 and, since this greatly overvalues the zloty, it means that all of our expenses in Poland are greatly magnified. The Polish Government through the PKO Bank will pay Polish residents 72 zlotys for dollars which they bring in--in other words, Poland grossly discriminates against foreign residents of Poland. The black market rate is reported to be about 80 to 1. The artificially low official rate for zlotys means not only that our operating expenses are much increased but also that any capital expenditures such as those for building are greatly augmented. It has been argued that we should use the leverage of our PL 480 agreements to get the Poles to give us a more favorable deposit rate under our PL 480 agreements and thereby a more favorable rate for our expenditures. This argument is reinforced by the fact that we are selling grain to Poland, taking the 24 to 1 rate of deposit, at a considerably lower price than the domestic price for compulsory delivery of grain and at a far lower price than the free market price.
There can be no question but that this is a proper matter to include in PL 480 negotiations; the rate of deposit is an essential provision in all of these agreements and the matter has specifically been discussed on at least one previous occasion. Nevertheless, I am inclined to feel that this should be discussed separately rather than in the course of any future PL 480 negotiations. The advantages to securing a higher deposit rate would not be very large. When the time for reconversion came we would get the same number of dollars for our zlotys regardless of the deposit rate. The only difference would be that, with a higher deposit rate, we would do relatively better on our operating expenses and capital costs (even here we might find that the Polish Government in its monopoly position might simply raise prices for us).There is no reason, moreover, to suppose that this use of zlotys would run to more than a relatively small proportion of the total amounts involved in our PL 480 agreements.
On the other hand, I think we would run a real risk that the Poles would refuse altogether to enter into a further PL 480 agreement if we were to insist on a higher deposit rate. Of course this danger could be mitigated by offering them large amounts of PL 480 commodities or otherwise more favorable terms but, as explained above, I would consider it imprudent to continue negotiating PL 480 agreements for large amounts of commodities. We are not in the position we were in the midst of the negotiations last December for a PL 480 agreement. I believe the Embassy should be instructed to protest this discrimination, but that this should not now be directly linked with PL 480.
In this connection, the question of the Ellender amendment requires consideration. As the Embassy has so often pointed out, this amendment grossly favors the CCC and enables it to gouge every United States Government agency operating in Poland by forcing them in effect to exchange their current dollars for the CCC's dollars, which are payable only many years hence without interest. The American taxpayer does not lose by this but the real cost of our programs in Poland is distorted out of all recognition. By accepting deferred payments for our surplus commodities we secure in effect a greatly reduced amount for them. We should not turn this around and claim that our programs in Poland cost us fantastic amounts more than they really do. It does make a great difference to State, and to a lesser degree to other agencies, to spend over twice what it should for its operations in Poland. The Ellender amendment should be modified so that the real rather than the nominal value of the CCC's money will be reflected by the rate at which it sells to other agencies.
I think that considerations very similar to those mentioned regarding the deposit rate should prevail in regard to at least two other economic grievances we are suffering from. The City of Warsaw owns all real estate within the city limits and will only allow foreign governments and private individuals to enter into long-term leases for the use of land. Land so leased is preposterously expensive and, since the city has a monopoly of it, there is no recourse. We have been compelled to pay a ridiculous sum (at least nominally) for an eighty-year lease on the land on which it is proposed to build the Ambassador's residence, and an even more ridiculous sum has been asked for land for our prospective school.
I believe that we should vigorously protest this holdup (since it can be only so characterized) but I do not believe that we should tie it in with PL 480. Again the game is simply not worth the candle. If we are going to let a member of the Warsaw bloc have nearly half a billion dollars worth of agricultural surpluses in order to achieve the benefits mentioned at the beginning of this report, we certainly do not want to be so nearsighted as to gag because we are held up for some hundreds of thousands of dollars for land. We also do not want to encourage the Polish Government to hold us up in order to be thereafter bribed to cancel the holdup.
The same reasoning applies, I believe, to another holdup, which is in connection with housing. Housing is extremely tight in Warsaw. The Embassy must get quarters for its staff either from the city or from private owners. The city a year ago increased its rents for foreign diplomats several fold and moreover insisted that they in effect be paid in foreign currency. (This was to prevent diplomats from using black market zlotys.) With regard to private owners the city collects 85% of the nominal rental, which means that rentals are extremely high. I believe that we should vigorously protest this situation also but I agree with what I understand the Department's position to be, that it would be inappropriate to inject this directly into PL 480 negotiations. The possibility of building Embassy housing has been discussed in another Embassy report. It should be added that we have just discovered that the Polish authorities will not permit us to buy existing houses from private owners.
We have numerous cultural objectives which we should like to attain. Most important among these is perhaps the establishment of a cultural center which would be a focus for the teaching of the English language and the dissemination of American culture among the people of Poland. Desirable as it would be to establish such a center, I fear it is not within the realm of practical possibilities under present circumstances. We could scarcely demand the right to establish such a center as a quid pro quo in our PL 480 negotiations since the Poles would doubtless strongly reject such an approach. On the other hand, the Poles are not going to permit the establishment of such a center out of the goodness of their hearts. Yet I see no harm in making an approach on it at a suitable time in the future. Although we would not link the center to PL 480, it is not improbable that the Polish decision on it would be influenced by their continued need for PL 480 assistance. An appropriate moment to raise this question might be when (and if) the Congress accepts the President's recent recommendation regarding MFN. Also, short of establishing such a center there are certain areas where considerable amounts of PL 480 zloty holdings of the United States Government could be profitably employed in stimulating the quantity and quality of English language instruction in Poland. The Embassy's views on this matter were submitted to the Department in detail in A - 660 of February 22, 1963./1/
/1/ Airgram A - 660 discussed the future of English-language training in Poland. (Ibid., Edu 4 Pol)
We should also like to see increased cultural exchanges between the United States and Poland. There are at the moment rather numerous such cultural exchanges, which I shall not enumerate in this report. On the other hand, as the Department is aware, the Polish authorities are forever putting a spoke in our cultural wheel. The Glenn capsule was in effect rejected as was the Medicine-USA exhibit. Passports for Ford and Kosciusko grantees have been refused. The circulation of American books, periodicals and newspapers in Poland is restricted. It is clear that whereas the Polish authorities are willing to have the cultural door slightly opened, they are determined to keep their foot firmly against it in order that it may not swing so far open as to be inconvenient from their standpoint. Here again I feel that there is nothing we can do except to protest as individual cases arise. We certainly cannot inject the question of specific cultural exchanges into PL 480 negotiations.
In short, I believe that we should not enter into large PL 480 agreements with Poland except possibly under circumstances which cannot now be foreseen. We should try to enter into modest agreements varying annually, in conformity with the cooperation we have received from the Polish authorities in the preceding year, with no strings except adequate publicity attached. We should not insist on tie-in sales since we want the offers we make to be so attractive that the Poles will almost certainly accept them faute de mieux and yearn for more. We should sweep away any legal obstacles to the purchase by Poland of agricultural commodities under competitive conditions as to prices and credit terms with other producers.
We should not wish to extend really significant help to a government which has consistently made its hostility to us clear. We should continue to give that government material assurance that if it adopts a more friendly attitude we will respond in kind. Our relative friendliness to them as expressed by our deeds should correspond to their relative friendliness to us. If they choose to be a member of a hostile bloc and yet continue to show some signs of friendliness to us we should be forthcoming in extending limited help to them. If they are more friendly we should be more friendly. They should always feel that they have something to lose by too negative an attitude towards us. They should equally feel that if they want better relations we will welcome this within the bounds of prudence. We have historic ties and we wish to preserve them. Our people are friendly towards each other and it would be a tragedy of history if we were ever to clash. We must not give the impression we shall always be friendly and helpful regardless of what they do. But we must--always--make it clear that if they want good relations that is precisely what we want, too.
There are, of course, other ways in addition to PL 480 by which we might influence the Poles of the Polish Government. An obvious example of this is the possibility of our recognizing the Oder-Neisse line as permanent. Doubtless the Polish Government would make concessions for a move of this nature on our part. However, since Germany is more important to us than Poland and since Germany is an ally and Poland is a member of a hostile bloc, this would be scarcely advisable.
A present irritant in our relations with Poland is the question of MFN. Congress has directed that this be withdrawn from Poland (and Yugoslavia) as soon as practicable. The President has not, as yet, acted on this and has recommended that this provision be repealed. The Polish Government has claimed (and from the record, I think it is pretty clear that their claim is justified) that the extension of MFN to Poland in 1960 was part of a general agreement by which, among other things, Poland agreed to pay 40 million dollars, in annual installments of 2 million dollars, in compensation for our claims for the American property which Poland nationalized.
Quite apart from the moral commitment which I believe we have toward Poland in this regard, I think it would be definitely unwise from a practical standpoint for us to cancel MFN for Poland. I think it probable that if we do cancel MFN, Poland will default on the Claims Agreement--indeed in conversations and even in notes the Polish Government has strongly intimated that it would do this. There is even danger that it might affect the reconversion of PL 480 zlotys to dollars. It would cause an unfortunate cooling in relations between Poland and the United States and to that extent prejudice the position which we have been so painfully and expensively building up in this country. I therefore strongly hope that Congress will accept the President's recommendation.
My predecessor in his Despatch 344 of January 13, 1961/2/ recommended the repeal of the Battle Act with regard to Poland, evidently with the thought in mind that this would permit us to extend help to Poland in strictly nonmilitary fields in which we too would derive some benefit, such as research, cultural centers and possibly hospitals and similar projects. I am strongly in favor of finishing the Children's Hospital at Krakow. Yet with the benefit of two years hindsight I question the present advisability of thus repealing the Battle Act. I do not believe that Congress would go along with such repeal. Quite apart from this, I do not think, so long as present circumstances prevail (and there is no reason to suppose that they will change) that we should extend grant aid to Poland. It has been argued that building public facilities would absorb scarce materials and skilled labor much needed in other sectors of this very tight economy even though no direct American interest were advanced. But after all, even the building of any public facilities however innocuous and humanitarian would relieve the Polish Government of the necessity of building them and would release the Polish Government of foreign debits, thereby making it possible for the country to import more from abroad for economic and perhaps military development.
/2/Not printed. (Ibid., 611.48/1 - 1361)
We do want the Polish Government to feel that relatively good relations with the United States are beneficial from Poland's viewpoint. We do want them to conclude that there is a clear if indirect connection between what they do and the relative benefits they receive from us. We do want them to feel that the door is open and can be opened wider. We do want to use every opportunity we perceive to ``engage" them, to establish more and closer contacts with them, to make our presence felt, to extend our influence, to disseminate our thinking. But we do not, I submit, want to give a member of the Warsaw Pact really significant material help.
John M. Cabot
81. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, POL Pol - US. Confidential.
Warsaw, August 2, 1963, 4 p.m.
222. Pass Agriculture. Secretary Freeman met July 31 for more than one hour each with Edward Ochab, Deputy Chairman of Council of State, Adam Rapacki, Minister Foreign Affairs, and Stefan Jedrychowski, Chairman State Planning Commission./1/ All are members 10-man Party Politburo hence few if any can speak with more authority, apart from Gomulka and Prime Minister Crankiewicz, both of whom on vacation in Soviet Union.
/1/Freeman visited Warsaw July 31 - August 3. The Embassy reported on his activities in airgram A - 117, August 8. (Ibid., POL 2 - 1 Pol)
Although much of conversations devoted to friendly amenities, all 3 raised points we had anticipated: MFN, another PL - 480 agree-ment, and boycott of retail sales Polish goods. Rapacki added lecture on dangers of strengthening role in NATO of West Germany, whose intransigeance he predicted would be responsible for preventing NATO - Warsaw Non-Aggression Pact.
Most specific was Jedrychowski, who pressed hard for initiation PL - 480 negotiations, pointing out Poland good customer for US agricultural commodities, had for example brought 200,000 tons which committed buy for cash last agreement. When Secretary suggested administration believed tactically safer wait until MFN situation resolved in Congress and better estimate made of Polish harvest, Jedrychowski countered that latter not pertinent, since even with best possible harvest Poland will be obliged import minimum 2 million tons, at most 3 million tons. Has already purchased 600,000 tons this year from Western countries in addition PL - 480.
Expressed his regret that US approached PL - 480 transactions from political standpoint, with result that international events often resulted in postponement of negotiations. This made planning difficult and strengthened position those elements in Poland who argued that dependence on US agricultural surplusses dangerous because of uncertainty. Raised point (as did Ochab) that of those countries receiving PL - 480 only Poland obliged repay in dollars, although forced admit terms were generous. Regretted that ``legal obstacles" (presumably referring Johnson Act) made it impossible for Poland purchase more agricultural commodities on normal commercial terms. Predicted Poland would be grain importer until at least 1980.
On MFN said first reaction within his government after Congressional action last year was stop claims agreement payments forthwith, since Poland had accepted claims obligations on clear understanding MFN would be granted. Maintained that even present situation intolerable, since uncertainty of future of MFN had resulted in cancellation or failure conclude substantial number of contracts.
On boycott, Secretary Freeman said that while position taken by Administration and President himself against boycott activities was clear, American citizens free to express opinions. Emphasized that in US political system President unable to exert will over either American people or Congress. Unfortunately international events often strengthened hand of right-wing elements. Made point that Laos in this category.
Comment: Both Jedrychowski and Ochab so firm in associating MFN with claims payments that we have impression reference to suspension payments in retaliation withdrawal MFN just bombast.
Cabot
82. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, POL 1 Pol - US. Confidential. Repeated to Belgrade.
Warsaw, August 15, 1963, 2 p.m.
306. It is perhaps not necessary for me to remind Department of importance I attach to MFN in connection with American-Polish relations. Polish Government has given strong indications it will cancel claims agreement if we cancel MFN, and considering undeniable connection which exists between these two agreements I scarcely think they could be blamed if they acted in this manner. This means that cancellation of MFN will cost us $34 million. I also feel that this is scarcely the moment to disregard a moral commitment.
There are distinct signs of improvement in our relations stemming largely, I believe, from test ban agreement./1/ Publicity in connection with inauguration of tinning mill was definitely favorable. There are reports that Polish media have been instructed to play down attacks on US and also that Thee is being withdrawn from Laos. It would therefore, in my mind, be the more unfortunate at this time to hit Poles grieviously on MFN.
/1/For text of the Nuclear Test Ban Treaty, signed in Moscow on August 5 and entered into force on October 10, see TIAS 5433.
Should Congress insist on cancelling MFN despite the President's recommendation I suggest that Department be ready immediately to inform Polish Government that we are prepared to enter into PL - 480 negotiations. This would at least indicate to Polish Government that we wish our special relations to continue. In this connection I reiterate my recommendation that we endeavor to repeal legislative obstacles to sale of agricultural commodities on credit.
Cabot
83. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, POL 17 Pol - US. Secret.
Warsaw, August 30, 1963, 1 p.m.
404. I am seriously disturbed by information received by our military attache that basic decision has been reached in Washington to require prior notification and permission and detailed itineraries for all travel in US by satellite attaches. Others are obviously better qualified than I to comment on military advantages and disadvantages of proposed move. Nevertheless, given Poland's geographic position and relative liberty to travel our attaches now enjoy, I question whether imposition of proposed regulations (which will probably be imposed reciprocally on our attaches) will be to our net advantage. At time of Cuba crisis last year, it was surely of vital importance to Washington to know that we observed no evidence of unusual military traffic across Poland. If satellite attache aware [were?] barred from relatively smaller areas, I question whether Poles would retaliate since they bar our attaches from small areas, but provised [provisory?] regulations are another matter. Also this seems to me poor time to make another move which Poles can only consider inimical. It will probably be taken as evidence we have changed our basic policy towards Poland and may precipitate descending spiral which I have heard [feared?]. I suggest Department take this up with DOD to be sure at least that they have considered adequately unfortunate repercussions which this move would almost certainly precipitate in Poland.
Cabot
84. Memorandum of Conversation
//Source: Department of State, Central Files, POL Pol - US. Confidential. Drafted by Malin and approved in S on September 17.
Washington, September 13, 1963, 4:30 p.m.
SUBJECT
US-Polish Relations; Request for new PL 480 agreement
PARTICIPANTS
Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor of Polish Embassy
The Secretary
Mr. William R. Tyler, Assistant Secretary, EUR
Mr. Herbert Malin, EE
To the Secretary's opening inquiry as to the health of Foreign Minister Rapacki, Ambassador Drozniak replied that it was not good, but that Rapacki was back at his desk./1/ Although the Foreign Minister had wanted to attend this month's opening UN session, he was advised against it for health reasons, and Deputy Minister Winiewicz will head the Polish delegation.
/1/Rapacki returned to his duties as Foreign Minister on July 1.
Ambassador Drozniak then explained that he had been in Poland for two months of vacation, but had also had opportunity for business talks with Mr. Gomulka, President Zawadzki, Prime Minister Cyrankiewicz, and Foreign Minister Rapacki. As for the internal economic situation, this year's short period of vegetation, owing to a late spring, coupled with drought conditions in midsummer, had resulted in a crop expected to approximate that of the previous year. Harvest prospects were neither very good nor very bad, as indicated in Gomulka's harvest speech on September 8. After a disastrous winter, sandwiched between two poor harvests, Poland was now beginning to catch its breath and get moving again, although the tasks ahead are not easy ones.
Concerning international relations, the Ambassador said the Polish people and official circles were enthusiastic over the recently concluded nuclear test-ban treaty and hoped this first step will lead to other relaxations of world tension and possible new agreements. In this atmosphere he had received instructions to work toward the development of bilateral relations in the direction of peaceful coexistence, and he wished to remind the Secretary that Poland was the only Warsaw Pact country that has already been working in this spirit for several years. He wanted to continue this work, emphasizing the economic relationship between the two countries.
Ambassador Drozniak said that his government entertains strong hopes that the question of MFN treatment will be resolved in the near future since unfortunate effects upon Polish trade are already being felt. He cited the attitude of US businessmen who have doubts as to the future of MFN and the hesitancy of Polish foreign trade firms to make future commitments for the same reason. It would be an unfortunate situation indeed if the withdrawal of MFN were to occur and bring about a loss of much of the good progress made between the two countries during the last few years. He explained that if he and the Poles sometimes appeared to show impatience on the question of MFN, it was because of the importance they attach to it.
The Ambassador then raised the question of negotiations for Polish purchase in this country of PL 480 grain. He was referring to an agreement similar to that of February 1, 1963--i.e., one, a part under which would be procured for cash, the rest for local currencies with eventual repayment in dollars. He pointed out that although obligated on February 1 to buy for cash only 200,000 tons of American grain, Poland had already purchased over 400,000 tons from the US, a fact over which Secretary Freeman had expressed his satisfaction in Warsaw. Poland anticipates that it must import about 2.5 million tons of foreign grain annually for several years to come, and it must plan on satisfying these requirements from several countries offering a source of supply. He referred to a conversation in Warsaw on September 6 between Ambassador Cabot and Foreign Trade Minister Trampczynski,/2/ in which the latter indicated that wheat purchases are so important to the Poles that they are willing to initiate cash purchases now, if the US can give some indication regarding the approximate amount of PL 480 sales envisaged. He recalled that in June Mr. Tyler had indicated that an answer to the Polish request would be forthcoming at the end of the summer. The Poles like to feel that summer is over already. He closed his presentation by saying he would be grateful if the Secretary could comment on the state of general bilateral relations and more particularly on the two specific problems he had raised.
/2/Cabot reported on discussions with Trampczynski in telegram 463 from Warsaw, September 6. (Department of State, Central Files, AID (US) 15 - Pol)
The Secretary remarked that Ambassador Drozniak doubtless would be raising these questions in more detail with Mr. Tyler. Moreover, he himself might have to see the Ambassador again soon since other commitments of his time might prevent him from saying all he wished today. He too characterized the test-ban treaty as an indication of progress. The possibility of further progress depended upon whether some points on which the US and other Western nations are willing to move ahead can be found which coincide with those on which the USSR is willing to move. Nevertheless, the Secretary conceded a general improvement in the atmosphere.
Regarding MFN, the Secretary stated that Congress has not yet acted. He believed the Ambassador was aware of the Administration's standpoint. In confidence, he referred to closed Congressional committee sessions on the MFN question, during which representatives of Congress have expressed reservations regarding Polish actions in Laos. As the US watches developments in Laos, it does not feel that the Polish ICC representative is acting in the spirit of the Geneva accords, and naturally this has a bad effect on US attitudes toward MFN treatment of Poland. The Secretary pointed out, again in confidence, that there in fact are some persons in Congress willing to move on MFN for Yugoslavia, but not for Poland, and principally because of events in Laos. While in Moscow recently, he had the impression that Moscow was more relaxed regarding Laos than was the Polish ICC representative himself. He said he felt further that Mr. Thee was more responsive to attitudes in Hanoi and Peiping than were the Moscow leaders.
Ambassador Drozniak interposed to comment that while developments during the first half of this year may have caused some in the US to feel this way, he had not seen or heard any adverse comments regarding Mr. Thee since his recall to Warsaw in June and subsequent return to Laos.
The Secretary rejoined that he had expressed his encouragement over Mr. Thee's attitude to Ambassador Drozniak prior to the latter's departure for Warsaw only to find on his desk after the conversation a cable concerning the Polish ICC representative which nearly prompted him in anger to telephone the Ambassador to take back his earlier remark.
As for PL 480, the Secretary said the question requires some further thinking on the part of the US, although he agreed that the Poles deserve an answer to their request in the near future. He inquired as to the status of the February 1963 agreement.
Mr. Dobrosielski explained that all sales and deliveries had been completed. Furthermore, talks on that agreement had been initiated in June 1962, but the agreement had been delayed by the long deliberations in Congress over the Trade Expansion Act; otherwise, there would have been a 1962 agreement instead of the one in February 1963.
The Secretary commented that the question of PL 480 sales was affected by other considerations. The Foreign Aid Bill would not come before Congress before October. He also indicated technical problems the Department still has to think about, all of which prevented him from giving an answer today. Mr. Tyler confirmed that we are actively considering the question and hope to give the Ambassador an answer soon.
Ambassador Drozniak acknowledged the existing difficulties, but reiterated his government's interest in obtaining some indication of approximate amounts under a new agreement, particularly since Poland is ready to initiate cash purchases. He pointed out that credit terms for commercial sales of US wheat were less favorable than those obtainable from countries like Canada and France. Polish foreign currency assets are limited, and it is necessary to keep close account of the balance. Since certain amounts must be allocated for US purchases, the Poles desired to commence these purchases as soon as possible.
The Secretary offered to see whether anything could be done in anticipation of negotiations that would have the effect of shortening their duration when they did take place. He agreed to study the matter carefully and to discuss it with Secretary Freeman.
85. Memorandum of Conversation
//Source: Department of State, Central Files, POL Pol - US. Confidential. Drafted by Malin and approved in S on November 19. The source text is labeled ``Part II of II Parts."
Washington, November 7, 1963, 11:45 a.m.
SUBJECT
US-Polish Relations; Berlin Question
PARTICIPANTS
Jozef Winiewicz, Polish Deputy Foreign Minister
Edward Drozniak, Polish Ambassador
The Secretary
EE--Herbert S. Malin
Minister Winiewicz called on the Secretary during the course of a brief trip to Washington from New York, where he was heading the Polish UNGA Delegation.
Following a lengthy discussion of events in Laos and Vietnam, Mr. Winiewicz took up US-Polish relations, which he described as of prime importance to Poland. Poland's wish was to improve relations and achieve closer cooperation, so long as this did not involve any sacrifice of Polish principles. He cited as an example of the imposition of unacceptable political conditions the press tie-in last May of US demands for the recall of ICC Commissioner Thee with Polish requests for a new PL 480 agreement. The new negotiations for grain credit under PL 480 posed similar problems. Whereas Poland treated PL 480 purchases as it does any normal commercial transaction and planned to repay its dollar obligations on schedule, the negotiations for each such agreement drag on for essentially political reasons. MFN to Poland, restored in 1960, had been in jeopardy since 1962, making shaky at best the foundation for normal trade relations. He said the appeal, signed by the President on October 25, for contributions to Radio Free Europe was another incident that had aroused enormous indignation within his government./1/ Finally, Mr. Winiewicz referred to press rumors of forthcoming travel restrictions for Polish diplomats in the US. This would surely provoke a strong negative reaction in Poland, since, other than for service attaches, no restrictions had ever been imposed on diplomats in Poland, not even during the cold war period, except for certain areas along the Polish-Soviet frontier. He urged that a distinction be made by the US for travel of diplomats, as opposed to attaches. The Poles are proud of their policy of unrestricted travel throughout their country and would hate to be forced to impose restrictions now.
/1/For text of the statement, see Public Papers of the Presidents of the United States: John F. Kennedy, 1963, p. 814.
The Secretary stressed the need to discuss US-Polish relations within the total political framework. The US knows, he said, that Poland's world position is governed by some limitations over which it has no control. The US also knows that ideological differences between the two countries are not going to be eliminated by negotiation. On the other hand, there is a strong favorable sentiment for Poland within the US, where even the Polish-American community, though opposed to the present Polish regime, favors granting of MFN to Poland. As for PL 480, he said, a problem arises when Poland goes to other world markets to buy grain on commercial terms, while expecting the US to provide grain under the interest-free 40-year repayment terms of PL 480.
Asked what had gone wrong since the Secretary's cordial talks with Foreign Minister Rapacki in Geneva in March 1962, the Secretary replied that if the Russians would agree to raise no questions as to the size and right of existence of Allied military forces in Berlin until a final German settlement is negotiated, it would render manageable all the other aspects of the problem. When Mr. Winiewicz indicated Polish worries over possible German acquisition of nuclear weapons, the Secretary assured him that it is in the very nature of nuclear weapons that those nations having them do not want others to have them. Hence, the US was opposed to their proliferation. The proposed multilateral force would not transfer nuclear weapons to any national government, nor permit any national government independently to determine when they would be employed. Mr. Winiewicz again thanked the Secretary for the meeting in taking his leave.
86. Memorandum of Conversation
//Source: Department of State, Central Files, POL 17 Pol - US. Confidential. Drafted by Malin and approved in G on November 14.
Washington, November 12, 1963, 11:30 a.m.
SUBJECT
Travel in the US of Officials from Warsaw Pact Countries
PARTICIPANTS
Edward Drozniak, Polish Ambassador
Dr. Marian Dobrosielski, Counselor of Polish Embassy
G--U. Alexis Johnson
EE--Herbert S. Malin
Mr. Johnson explained that he had called in the Ambassador to present a note establishing restrictions on the travel within the US of all officials of Eastern European countries who are assigned here./1/ The note specifies that some 12 - 13% of the area of the conterminous US is henceforth closed to travel for reasons of safeguarding national security. Commercial air and train travel would not be affected, all principal cities remain open for visiting, and two cross-country automobile highways remain open to assure automobile access to the Pacific coast.
/1/For texts of the U.S. statement announcing the restrictions, the U.S. notes to individual countries, and a list of U.S. counties closed to travel, see Department of State Bulletin, December 2, 1963, pp. 860 - 863.
Mr. Johnson pointed out that there had hitherto been a lack of equal opportunity for travel of US officials and those of other NATO countries within the USSR, as opposed to the unrestricted access to all portions of the US by officials of Warsaw Pact countries other than the Soviet Union. He elaborated in further detail the heartland concept as it applied to USSR and the US, respective military leaders of the Warsaw Pact and NATO alliances. For these reasons, he said, the US reluctantly can no longer disregard its own national interests, and the new system of travel controls had been devised. He requested voluntary observance of the new limitations, since no requirement for prior notification of proposed travel would be imposed by the US. He made clear that when the USSR relaxes its present travel controls on Western officials, the US would be happy to negotiate similar modifications in its own system.
Ambassador Drozniak, in accepting the note, first disclaimed his authority to speak on behalf of all the Warsaw Pact countries. He said that as a Pole, however, he received the news with concern and dissatisfaction. He was convinced that his government and Polish public opinion would react similarly upon receipt of the news, since Poland had imposed no restrictions on travel of Western diplomats, not even during the coldest period of the cold war. He reserved the right to reply at a later date after studying the note and receiving the views of his government. Personally, the Ambassador thought that similar restrictions might have to be imposed upon travel in Poland of US diplomats, and possibly also upon the officials of other NATO countries. In any event, he felt that the step would be interpreted as a cold war action, rather than as a step toward easing of tension.
Mr. Johnson explained that the area of the US closed to travel of Eastern European officials was only half that closed to Soviet officials, and that it approximated that area in Warsaw Pact countries presently closed for Western travel. For this reason, he said he did not believe that additional retaliatory control measures were justified.
Ambassador Drozniak replied that since no Polish territory was presently closed to US personnel or to anyone else, failure to retaliate could only reflect discredit on Poland's dignity as a sovereign nation.
87. Telegram From the Embassy in Poland to the Department of State
//Source: Department of State, Central Files, FT 4 - 4 Pol. Confidential; Limit Distribution.
Warsaw, December 20, 1963, 3 p.m.
1118. Passage MFN by Congress/1/ enables us for first time in some 19 months to plan our policy for relations with Poland on reasonably sound foundations. During this protracted period over-riding importance MFN and uncertainty re congressional action have made policy formulation almost impossible. On one hand we have been unable pursue effectively such matters as bond settlement and removal of Thee from Laos, not to mention numerous minor grievances. On other hand it has been difficult to know how far to go, for example with regard to PL - 480, in our efforts further special relations which we have steadily tried since 1956 to establish with Poland.
/1/Section 402 of the Foreign Assistance Act of 1963, P.L. 88 - 205, was approved December 16. For text, see 77 Stat. 379.
With MFN question settled, I hope that a new PL 480 agreement for approximately 30 million dollars will soon be concluded with Poland. I recommend that we do not offer larger amount than this even though I expect Poles will strongly seek more. If Department Agriculture insists, I would not object to our requiring tie-in sales. However I would urge that in addition we make every effort facilitate availability of competitive credit terms for Poles and I think they will then buy more from us in fact than they would be willing to commit themselves to buy in an agreement.
Outstanding issue between us today which might now be negotiable is presumably question of Polish defaulted bonds. I have not pursued this in recent months since MFN uncertainties obviously impinged on Polish ability to service this Department. I believe I should now raise this matter again. In their present economic difficulties Poles will almost certainly refuse to assume these obligations and I do not think we should insist just yet, for example, on refusing further PL 480 transactions (I do feel, however, that this remains unfinished business). I also think Poles should be reminded in any PL 480 negotiations that it is difficult to see how they can assume new obligations if they are unable to meet old ones in not dissimilar amounts.
Question of travel restrictions in Poland (presuming we reject their request for reconsideration of ours) might be taken in connection with PL 480 agreement but I do not recommend this. My feeling is that we would either pay too high a price for what we get or run the risk that Poles would reject whole deal with disastrous effects on what we are seeking to accomplish in this country. Department is of course aware Poles are very sensitive with regard to attaching any political conditions to PL 480 deals.
We can scarcely attach any conditions with regard to actions of any new Polish ICC representative in Laos in connection with PL 480 agreement. Should, however, Polish Commissioner's actions be subject to justified exception on our part, we should be now in stronger position object to them.
In regard firmly expressed Polish intentions seek reciprocity regarding travel restrictions, I feel that they [we?] would be prepared show Poles concretely that reciprocity is two-way street. One way do this would be by abolishing immunities for Polish White List personnel. However, quite apart from legal difficulties Department has previously mentioned in this regard, I see some disadvantages to such move. It would abolish precarious protection we have been able to secure for our own non-commissioned personnel here. It might result in Polish retaliation against us in sectors where we are vulnerable, for example by stopping Embassy support or by restricting free entry privileges. On other hand, it might, in view of fact that Poles gave commissioned officers in non-commissioned positions in Washington, make our travel restrictions more effective since any improper activities of their White List personnel after immunity was cancelled might result in legal measures against their non-commissioned personnel for such activities. I am inclined to think that this is card we should hold and play later if desirable.
If Poles establish travel restrictions in retaliation, I believe that I should be instructed to argue with them various matters in which we have been subjected to unfair and discriminatory treatment. Pole can go to PKO and get 72 zloties for his dollar whereas foreigners can get only 24. In Washington Polish Government and its employees can buy or lease land, houses or apartments on competitive market without securing permission from US Government. In Warsaw we can secure these only from what amounts to a government monopoly and at extortionate prices. I do not expect Poles would give us any satisfaction in these matters and I do not recommend severe pressure on them to that end. My thought is that we should keep before Poles fact that we have legitimate grievances in order to put us in better posture re action other matters as occasion arises.
Polish officials can still travel over most of the US and meet with Americans in seminars and round-table discussions, can deliver speeches on any subject, and are generally unimpeded in making their presence felt in US. In Poland we are perfectly aware that such contacts between Poles and American officials are prevented by Polish authorities.
We have not heard whether any final decision has been reached with regard possible retaliation against Poles for unjustified expulsion our two attaches last fall. Should Poles retaliate by establishing travel restrictions on US officials in Poland, I am inclined to think that it would now be advisable to expel some Polish officer against whom there is some evidence in retaliation for Polish action. This might of course precipitate further retaliation on their part and might start descending spiral of relations. I am inclined to think however that effect would be to remind Poles that strict reciprocity is not necessarily best basis for conducting international relations, while not sufficiently annoying them to precipitate undesirable repercussions. It is of course most important not to precipitate descending spiral in our relations but experience suggests to me that Polish Communists react better to prudent firmness than to flabbiness.
I think I should also remind Foreign Office that we have yet to hear anything from them on our proposed consular convention despite several followups on our part. We surmise Poles may have wished to see in which direction our relations would turn or what would happen in our consular negotiations with Soviets before replying to our proposals.
Caboty
Yugoslavia
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