CAB129-45 — Page 516

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THE SETTLEMENT OF GERMAN

EXTERNAL DEBTS

1. The Governments of France, the United Kingdom and the United States have reached the conclusion in agreement with the German Federal Government that the settlement of German external debts is in the interests of the restoration of normal economic and financial relations between Germany and other countries. They have also agreed with the German Federal Government that interested Governments, including that of the Federal Republic, creditors and debtors, shall participate in working out a settlement plan in accordance with certain principles.

2. The exchange of letters which placed this agreement on record, and the letter from the Allied High Commission to the German Federal Chancellor which preceded it and which set out the views of the three Governments in regard to the settlement of claims against Germany, were published on 6th March, 1951 (attached as Enclosure 1).

3. As recorded in this exchange of letters of 6th March, the three Governments have been engaged in preparing proposals for the working out of arrangements for an orderly overall debt settlement which would be fair and equitable to all the interests affected. They have now completed a tentative procedure for arriving at acceptable settlement arrangements, a statement outlining their present views on points of principle relating to the settlement, and a list of certain technical questions requiring con- sideration. The relevant documents, which are attached as Enclosures 2, 3 and 4, are intended to serve as a preliminary basis for consultations later in the year. To prepare for these consultations the three Governments intend to hold informal preliminary meetings in order to obtain views of some of the interested parties. Thereafter further communications will be sent on the subjects of the enclosures listed above, and arrangements will be made for participation in these consultations by representatives of creditors and debtors, of the German Federal Government and of the Governments of countries having a significant creditor interest.

4. The three Governments, in order to make an overall settlement of German debts possible, are prepared to modify the priority of their claims in respect of the post-war economic assistance which they furnished to Germany, on condition that the settlement plan is acceptable to them.

5. The arrangements contemplated relate to Germany's pre-war public and private indebtedness and to the German debt arising out of post-war economic assistance; they do not relate to claims arising out of the war, which can only be dealt with in connexion with a peace treaty.

6. The three Governments have set up a Tripartite Commission on German Debts to act on their behalf in the necessary consultations and negotiations. Its terms of reference are attached as Enclosure 5.

May, 1951.

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