Page 518 The plan should also provide for the settlement of certain claims in connexion with social insurance operations and with the conversion into Deutschemark of Reichsmark brought back from Germany by repatriated prisoners-of-war and deportees, if these claims have not been disposed of before the establishment of the plan.
In addition to the foregoing matters, other questions may arise in the detailed working out of the settlement arrangements. For example, it may be necessary to give consideration to certain pre-war debts owed to the residents of foreign countries which may not be strictly classifiable as external in character.
The three Governments recognise that a settlement plan of the scope envisaged can be put into effect only through some modification of the priority of their claims in respect of post-war economic assistance. Accordingly, the three Governments have agreed that, provided a settlement plan is worked out in accordance with the principles outlined in the preceding paragraphs and provided further that agreed procedures and controls are established that will govern this settlement plan and all payments made under it, they will modify the priority of their claims in respect of post-war economic assistance to the extent necessary to permit the fulfilment of such an agreed plan. This qualified modification of the priority of claims in respect of post-war economic assistance will not preclude the continued fulfilment of the obligations which the Federal Government has already incurred under existing agreements concerning such claims.
The three Governments feel certain that the Federal Government shares their view as to the desirability of restoring Germany's credit and of providing for an orderly settlement of German debts which will ensure fair treatment to all con- cerned, taking full account of Germany's economic problems. They feel equally certain that the Federal Government will share their belief that such a settlement will contribute to the restoration of normal relations between Germany and other countries.
The three Governments would appreciate receiving a formal assurance from the Federal Government that it regards itself as responsible for the pre-war external debt of the German Reich and that it recognises its debt with respect to the expen- ditures incurred by the Occupying Powers for economic assistance to the Federal Republic and affirms the priority of the claims arising from such assistance over other claims against Germany. They would also appreciate receiving assurances of the co-operation of the Federal Government in working out and implementing a settlement plan as outlined above.
In order to give formal effect to these undertakings and assurances and to the undertakings and assurances offered by the Governments of the three Occupying Powers, I have to propose that an agreement should be concluded by an exchange of notes between the Allied High Commission and the Federal Government. It is the intention of the High Commission to proceed with the modification of the controls in the Occupation Statute on the lines agreed by the three Foreign Ministers as soon as this exchange of notes is completed and the assurance in respect of co-operation in an equitable apportionment of materials and products in short supply required for common defence, on which a separate letter is to-day being sent to you, has been received. However, it is the understanding of the three Governments that the exchange of notes on debt obligations will be submitted to the Federal legislature for approval and I have to request you to confirm that this will be done at the appropriate time.
I beg Your Excellency to accept the assurance of my high esteem.
(Signed)
IVONE KIRKPATRICK,
Chairman.
B.-LETTER TO THE ALLIED HIGH COMMISSION FROM THE GERMAN FEDERAL CHANCELLOR
Mr. High Commissioner,
Bonn,
March 6th, 1951
In reply to your letter of 23rd October, 1950-AGSEC (50) 2339—I have the honour to inform you as follows:
I
The Federal Republic hereby confirms that it is liable for the pre-war external debt of the German Reich, including those debts of other corporate bodies subsequently to be declared liabilities of the Reich, as well as for interest and other charges on securities of the Government of Austria to the extent that such interest and charges became due after 12th March, 1938, and before 8th May, Page 518 of 587
Page 518
B 2
40608B
388
4
Page The fleaGovernment understands that in the Pagamination 58the manner in which and the extent to which the Federal Republic will fulfil this liability account will be taken of the general situation of the Federal Republic, including, in particular, the effects of the limitations on its territorial jurisdiction and its capacity to pay.
II
The Federal Government acknowledges hereby in principle the debt arising from the economic assistance furnished to Germany since 8th May, 1945, to the extent to which liability for such debt has not previously been acknow- ledged in the Agreement on Economic Co-operation concluded on 15th December, 1949, between the Federal Republic and the United States of America, or for which the Federal Republic has not already taken over responsibility under Article 133 of the Basic Law. The Federal Government is ready to accord the obligations arising from the economic assistance priority over all other foreign claims against Germany or German nationals. The Federal Government regards it as appropriate to regulate any questions connected with the recognition and settlement of these debts by bilateral agreements with the Governments of the countries which have rendered economic assistance patterned on the Agreement concluded with the United States of America on 15th December, 1949. The Federal Government takes for granted that these agreements will contain an arbitration clause for cases of dispute. The Federal Government is prepared at once to enter into negotiations for the conclusion of such agreements with the Governments concerned.
III
The Federal Government hereby expresses its desire to resume payments on the German external debt. It understands that there is agreement between it and the Governments of France, the United Kingdom of Great Britain and Northern Ireland and of the United States of America on the following:--
It is in the interest of the re-establishment of normal economic relations between the Federal Republic and other countries to work out as soon as possible a settlement plan which will govern the settlement of public and private claims against Germany and German nationals.
Interested Governments, including the Federal Republic, creditors and debtors, shall participate in working out this plan.
The settlement plan shall in particular deal with those claims, the settlement of which would achieve the objective of normalising the economic and financial relations of the Federal Republic with other countries. It will take into account the general economic position of the Federal Republic, notably the increase of its burdens and the reduction in its economic wealth. The general effect of this plan shall neither dislocate the German economy through undesirable effects on the internal financial situation nor unduly drain existing or potential German foreign-exchange resources. It shall also not add appreciably to the financial burden of any occupation Power.
The Governments concerned may obtain expert opinions on all questions arising out of the negotiations on the settlement plan and on the capacity to pay. The result of the negotiations shall be set forth in agreements. It is agreed that the plan will be provisional in nature and subject to revision as soon as Germany is reunited and a final peace settlement becomes possible.
I beg Your Excellency to accept the assurance of my highest esteem.
ADENAUER.
(Signed)
C.-REPLY TO THE GERMAN FEDERAL CHANCELLOR FROM THE ALLIED HIGH COMMISSIONERS ON BEHALF OF THE GOVERN- MENTS OF FRANCE, THE UNITED KINGDOM AND THE UNITED STATES.
Mr. Chancellor,
6th March, 1951.
In reply to your letter of 6th March, 1951, on the subject of German indebtedness we have the honour, on behalf of the Governments of France, the United Kingdom of Great Britain and Northern Ireland, and the United States of America, to acknowledge the undertakings of the Federal Government in regard to the responsibility of the Federal Republic for the pre-war external debts of the German Reich and for the debt arising out of the economic assistance Pagrnished tof G&many by the three Governments sindeagh Ma9, Ɑ6487
5
Withaggafel to afe5priority accorded to the obligations arising age the pos587 war economic assistance, we are authorised to state that the three Governments would not propose to exercise this priority in such a way as to restrict settle- ment of foreign-held claims arising out of trade subsequent to 8th May, 1945, essential to the economic recovery of the Federal Republic.
With regard to the question of an arbitration clause in agreements covering the debts for post-war economic assistance, the three Governments will be pre- pared, when negotiating such agreements, to consider whether it would be useful to include an arbitration clause to deal with any matters which might be appro- priately settled by such a procedure.
aims against
We further have the honour on behalf of the three Governments to confirm the understandings of the Federal Government as set forth in the second para- graph of Article I and in Article III of Your Excellency's letter. They are now engaged in preparing proposals for the working out of settlement arrangements: these will provide for the participation of foreign creditors, German debtors, and interested Governments, including the Federal Government. The proposals will be designed to arrive at an orderly overall settlement of pre-war Germany and German debtors and of the debt arising out of the post-war economic assistance, which would be fair and equitable to all the interests affected, including those of the Federal Government. It is the intention that the resulting settlement should be embodied in a multilateral agreement; any bilateral agreements that may be considered to be necessary would be concluded within the framework of the settlement plan. As soon as their proposals are ready the three Governments will communicate them to the Federal Government and to other interested Governments and will discuss with them these proposals and the procedure to be adopted for dealing with the subject.
We have the honour to state that our three Governments regard Your Excellency's letter under reference and this letter as placing on record an agree- ment between the Governments of France, the United Kingdom of Great Britain and Northern Ireland, and the United States of America, on the one hand, and the Government of the Federal Republic on the other, concerning the questions of German indebtedness covered in these letters. These letters are prepared in English, French and German, each text being equally authentic.
Accept, Mr. Chancellor, the renewed assurances of our highest esteem.
A. FRANÇOIS-PONCET,
For the Government of the French Republic.
(Signed)
IVONE KIRKPATRICK,
For the Government of of the United Kingdom.
JOHN J. MCCLOY,
For the Government of the United States of America.
ENCLOSURE 2
PROPOSED PROCEDURE
1. In order to arrive at a settlement of German pre-war and post-war external debts in co-operation with the interested parties, the three Governments have worked out a tentative procedure for organising consultations and negotia- tions, in which interested Governments, including the German Federal Government, and representatives of debtors and ereditors, would take part. In the meetings envisaged in this procedure the three Governments would be represented through the Tripartite Commission on German Debts.
2. The procedure is designed to lead to the conclusion of an intergovern- mental Agreement which would establish the general conditions under which outstanding debts would be settled between individual debtors and creditors.
3. In the view of the three Governments the Agreement should be arrived at in such a way that its terms would be acceptable to the various interests affected. This means that representatives not only of Governments but also of private creditor and debtor interests should have the opportunity to participate fully in working out the general settlement arrangements which would form the basis of the Agreement. Their participation is in fact an essential step towards and con- stitutes in itself an element in the normalisation of Germany's international