On May 23, as you know, the Foreign Ministers of the four Occupying Powers of Germany will meet in Paris to discuss Berlin, currency and Germany generally.

We understand that Messrs. Bevin, Acheson and Schuman will have a preliminary talk on May 21 presumably to decide on a common line to take when the Council meets.

2. The Soviet Union's proposal at the meeting can be forecast with reasonable precision although there is still some question regarding the Soviet motives and what they hope to obtain from the meeting. The terms of the Soviet proposals will probably draw heavily upon the progamme given in the Warsaw Declaration of June 24, 1948, of the Soviet and satellite foreign ministers which mentions:

          (a) The implementation of measures to ensure final demilitarization.

          (b) The institution for a definite time of four-power control over Ruhr industry.

          (c) The establishment of a provisional democratic peace-loving government for the whole of Germany.

          (d) The conclusion of a peace treaty with Germany followed by the withdrawal of occupation forces within a year after its conclusion.

          (c) The elaboration of measures for the fulfillment by Germany of her reparations obligations.

3. More recently, the Soviet Government has encouraged a German suggestion that the four powers should guarantee Germany's perpetual neutrality thereby preventing its membership in the O.E.E.C. or the Council of Europe.

4. The extent to which the U.S.S.R. is willing to meet known western requirements for Germany on these subjects will give the Western Powers their first definite information as to which of the following motives has prompted the Soviet Government to reopen four-power talks:

          (a) To exert pressure on the Germans to delay the formation of a West German Government.

          (b) To obtain a lifting of the counter blockade which has been working considerable hardships on the eastern zone of Germany.

          (c) To obtain a settlement based on German unity which might eventually lead to communist domination of the whole country.

          (d) To disengage itself from Germany in order to concentrate elsewhere. (e.g. Yugoslavia, the Middle and the Far East).

5. If the Soviet Union enters the negotiations with the limited objectives expressed in (a) and (b) of the preceding paragraph, the Western Powers would have to deal with a familiar problem and it should not be too difficult to show that the U.S.S.R. was not seriously concerned with a German settlement. If on the other hand the Soviet Union intends to seek a settlement for reasons indicated in (c) and (d) of the preceding paragraph and if it is prepared to make considerable concessions, the Western Powers would be confronted with a new situation in the face of which it may not be easy for them to obtain agreement among themselves. Probably the most difficult questions to decide on would be those of withdrawing occupation troops and establishing a central German government.

6. During the last year the Western Powers have reached a number of agreements covering, in effect, almost every aspect of a general German peace settlement. A list of these agreements is attached.† In general the Western Powers have consist ently announced their willingness to have the Soviet Union subscribe to these agreements and to play its part in their execution. Occasionally this attitude has been stated explicitly and officially but in most cases it has been implicit or announced by individual participants. The basis for ail these agreements was the London Report of June 7, 1948, and the United Kingdom and United States made it clear that its terms and the agreements reached under it were applicable to all of Germany whenever the Soviet Union reached a more amenable frame of mind. (See extracts attached).†

7. The information we have received from London, Washington and Pads tends to support the view that the Western Powers will oppose a complete withdrawal of occupation forces from Germany. The existing three-power agreements on Germany depend in varying degrees upon the continuation of the occupation. Assuming that the Western Powers intend to base their proposals for a general settlement on these three-power agreements, it would be difficult for them to accept the end of occupation without first making substantial changes in them. To attempt to do so might threaten western unity. There is a possibility, however, that if the Soviet Government is determined to withdraw its forces from Germany the Western Powers may be obliged to modify their three-power agreements or be held responsible by the Germans for the continuation of the occupation and division of Germany.

8. From the western point of view the German problem is three sided:

          (a) To democratize Germany and created a community of interest with the west.

          (b) To prevent Germany from going communist either to come under Soviet domination or to capture the leadership of world communism.

          (c) To prevent Germany from returning to militant nationalism which might be accompanied by an alliance with the Soviet Union.

9. In many respects the solution to any one of these aspects of the problem is antithetical to the solution of the other two. Thus, the conditions required to make Germany a democracy might be used to pave the way to communist control; the steps necessary to ensure against communist domination might conflict with its democratization and could contribute to the rise of neo-Naziism; provision against German military resurgence might make Germany powerless against communist organizations and limit the freedom which we consider to be essential to democracy.

10. Any solution that would satisfy the west involves the taking of calculated risks based upon an assessment of the probable attitude of the Germans themselves. It is not possible to prescribe conditions which would exclude the possibility of pressure tactics by German communists, with or without the backing of Soviet occupation forces. In any circumstances, particularly in the elections which must precede the establishment of a central German government, the Western Powers would have to take a chance that the Germans would not only prefer association with the west but would resist communist pressure and threats in order to produce a pro-western government. It may be that the Germans' slavophobia and their experiences of Soviet policies would be enough to ensure their activity in favour of the West if all possible measures were taken to protect would-be western advocates from violence.

11. If the Soviet Union is in earnest in wishing a general settlement, it would appear that the Western Powers could seek a solution along the following lines:

          (a) Offer to extend their tripartite agreements to all of Germany, including Soviet membership in the three-power control organizations already provided for.

          (b) Create, so far as may be possible by the laying down of the terms, the conditions calculated to encourage all those opposed to the Soviet Union to take an active part in the political life of the reunited country.

          (c) Ensure the continued sympathy of their present supporters by offering some alternative to the Soviet proposal for withdrawal either by limiting the occupation in point of time, or by limiting it to certain parts of Germany, or a combination of both.

          (d) Insist on German's eventual independence and right to choose its future course in world affairs for itself, thereby anticipating or countering any Soviet demand for a four-power guarantee of German's perpetual neutrality.

12. Some comments on these issues are being prepared in the Department should the Government wish to present views to the Western Foreign Ministers at their meeting on May 21, or should any of the participants ask for our opinion.

A.D.P. H[EENEY]