You will recall that on March 20th last, the Soviet Commander-in-Chief in Berlin, General [sic] Sokolovsky [Marshal V.D.I, ended the activities of the Allied Control Council which was responsible for governing Germany under the Potsdam and other four-Power decisions.

2. The issue upon which General Sokolovsky chose to bring the Allied Control Council's work to an end was the Western Powers' refusal to report to the Control Council on the 'decisions" which were alleged to have been reached in the first part of the London talks on Germany. The first session of the London talks had ended on March 6th and a number of tentative agreements were published in a communiqué. However, the Western Powers denied that any 'decisions" had been reached and in any event the agreements that would be reached would be in the form of recommendations which would be submitted to the governments of the participating states for action.

3. As you know, the Soviet departure from the Allied Control Council was accompanied by a series of annoying restrictions on the Western Powers' communications between the Western Zones and their sectors of Berlin. The resultant tension reached its climax in the Gatow air crash on April 5th when a Soviet fighter aircraft collided with a United Kingdom transport with serious loss of life. Thereafter Soviet restrictive regulations were enforced more reasonably.

4. It was anticipated that when the final report of the London talks was announced, as it was on June 7th, there would almost certainly be an even more energetic reaction on the part of the Soviet authorities. Their initial reaction was, however, comparatively mild until the Western Powers announced on June 18th their intention to reform the discredited German currency without Soviet participation.

5. Although the Western Powers in their original announcement excepted their sectors of Berlin from the currency reform, the Soviet authorities asserted, nevertheless, that Berlin was 'in" the Soviet zone of occupation and that Western currency would not be used in the city. On June 22nd, there was a four-Power meeting in Berlin to discuss currency reform. The Western Occupying Powers expressed their willingness to accept a single currency for all of Berlin and agreed that Soviet Zone currency could be used provided that 'the adoption of the currency reform should be by quadripartite agreement" and that 'the issue of currency should be subject to quadripartite control"

6. General Sokolovsky refused these conditions and on the same day he announced the Soviet plan for currency reform.¹ The Soviet Commander at the same time asked that no difficulties be raised to the introduction of Soviet Zone currency into all of Greater Berlin as the Soviet plan stipulated. The Western Military Commanders informed the Soviet authorities that they could not agree to the use of Soviet Zone currency in their sectors of Berlin unless the conditions mentioned above were fulfilled. They then issued separate instructions which intro duced a new special currency to the three Western sectors of the city.

7. Hitherto, four-Power Military Government in Berlin had continued to function under the Kommandatura in spite of the virtual demise of the four-Power governing body for all of Germany - the Allied Control Council. However, on June 24th the Soviet representative on the Berlin Kommandatura was reported as saying that that body has ceased to exist 'for all intents and purposes."

8. It has, of course, long been apparent that the object of the Soviet authorities was to rid themselves of the Western representatives in Berlin whose presence, they claimed, was justified only because Berlin was the seat of four-Power government for all of Germany. As this reason no longer applied, the Soviet view is that the Western Powers no longer have the right to remain in the city. As you know, the Soviet pressure has varied from complete interruption of land communication to the cutting off of power from the Western sectors. It is, of course, impossible to say how far their determination to bring about a withdrawal of Western Powers from Berlin will carry them.

9. The United States Commander-in-Chief has expressed himself in unmistakeable terms that the United States authorities will leave Berlin only if physically ejected. General Clay has been quoted as saying that an attempt to do this would mean war.

10. The United Kingdom is, it seems, equally determined to stay and Mr. Robertson has reported that the Foreign Office considered that there was a real danger of a clash in Berlin during the coming months but that even an armed clash would not lead to war.

11. The French have consistently expressed their anxiety over possible Soviet reaction to the London recommendations on Germany and have been lukewarm to the idea of adopting an uncompromising stand on the Berlin issue. They have, new ertheless, followed the United States-United Kingdom lead in all the declarations affecting the Western Powers' position in Berlin.

12. I am sending a copy of this memorandum to the Secretary of State for External Affairs.

E[SCOTT] R[EID]

¹Dans son télégramme 168 du 23 juin (DEA/7-CA(S)†), Pope observait que par cet avis et par h réponse britannique du même jour,
In telegram 168 of June 23 (DEA/7-CA-14(S)†), Pope commented that, with this announcement and the British response of the same date, the issue at long last has been squarety joined.