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ENCLOSURE 1
A.-LETTER TO THE GERMAN FEDERAL CHANCELLOR FROM THE
ALLIED HIGH COMMISSION
AGSEC (50) 2339
Mr. Chancellor,
23rd October, 1950.
I have the honour to refer to the communiqué issued by the Foreign Ministers in New York in which they indicated that the Federal Government would be expected to undertake certain commitments consonant with the new responsibilities which the Governments of the three Occupying Powers contemplated would be conferred upon the Federal Republic. The three Governments hold that, at the moment when the Federal Government assumes responsibility for the conduct of its foreign relations, the status of the obligations resting upon it in its relations with foreign countries should be clarified. The three Governments regard the Federal Government as the only German Government which can speak for Germany and represent the German people in international affairs pending the reunification of Germany. They consider, therefore, that pending a final peace settlement, and without prejudice to its terms, the Federal Government is the only Government entitled to assume the rights and fulfil the obligations of the former German Reich. The High Commission has communicated to the Federal Government separ-- ately the decisions which have been taken by the foreign Ministers concerning the clarification of the status of treaties to which the German Reich was a party. The question of the obligations of the Reich also involves the external debt of the Reich. The three Governments consider that the Federal Government should in consonance with what has been said above, assume responsibility for the pre-war external debt of the Reich. They recognise that, in the determination of the manner in which and the extent to which the Federal Government is to fulfil the obligations arising from this assumption, account must be taken of the general situation of the Federal Republic, including, in particular, the effect of the limita- tions on its territorial jurisdiction.
The determination of the financial responsibilities of the Federal Government necessarily also involves the obligations resulting from the economic assistance which has been furnished by the Occupying Powers to Germany. As the Federal Government is aware, the Occupying Powers have, at considerable cost to the peoples of their own countries, extended substantial economic assistance to Germany since the termination of hostilities, with a view to ensuring the well-being of the German people and assisting them in the rehabilitation of their economic life. In due course the Occupying Powers will call for a settlement of the obligations arising from this assistance. They will consider in the settlement of these obliga- tions the ability of the Federal Government to pay and other relevant factors. Meanwhile, they consider that the Federal Government should acknowledge its debt in respect of the expenditures which they incurred and that it should recognise the prior status of these obligations over other claims.
It is the intention of the three Governments to proceed as promptly as possible with the development of a settlement plan which will assure fair and equitable treatment of the interests affected and remove as far as practicable obstacles to normal economic relations between the Federal Republic and other countries. These arrangements would necessarily be provisional and subject to revision when Germany is reunited and a final peace settlement becomes possible. The three Governments are agreed that the plan should provide for the orderly settlement of the claims against Germany, the total effect of which should not dislocate the German economy through undesirable effects on the internal financial situation, nor unduly drain existing or potential German foreign exchange resources. It should also avoid adding appreciably to the financial burden of any Occupying Power.
The three Governments have instructed the Intergovernmental Study Group on Germany in London to prepare a plan for handling claims in accordance with the above principles and to recommend arrangements for the appropriate partici- pation of other interested Governments and the debtors and creditors, including the Federal Government. The Federal Government will in due course be informed of the results of these studies.
Although there are numerous problems to which it has not yet been possible to give consideration, the three Governments are in agreement that the settlement plan should include, in particular, those categories of claims whose settlement would best achieve the objective of normalising the economic and financial relations of the Federal Republic with other countries. In their view the plan must therefore necessarily deal with the pre-war external debt as well as with the claims in respect of post-war economic assistance which enjoy a priority status over all other claims. Page 517 of
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