Allied Reparations Commission

History

The commission was established in Moscow under the Yalta Protocol of 4–11 February 1945, with one representative each from the USSR, the United Kingdom and the United States. The US delegation was headed by Edwin W. Pauley, designated by President Truman on 27 April 1945 as his personal representative with the rank of ambassador; the British representative was Sir Walter Monckton. On 3 July 1945 Pauley protested to Maisky that the plenary meeting had been postponed for the third time, that the American delegation had been in Moscow twenty-two days without a single figure supporting the Soviet proposal, and that reparation 'must be based, in the first instance, upon things and not upon dollars.' On 11 July 1945 he reported that the percentage formula for dividing reparations among the three governments was 'not far from agreement,' that definitions of 'restitution' were agreed while 'war booty' was still undiscussed, and that agreement on eight principles was near after Monckton waived the last objection to Principle No. 4.

The deadlock turned on the 'first charge principle.' The United States and Great Britain resisted massive transfers of current German production to the Soviet Union, holding that German production had first to pay for imports of food and essential goods needed by the defeated German people, and invoking the principle to avoid a repeat of Versailles, during which the US had financed German essential imports so that Germany could honour reparations. The Soviet side interpreted this as an unjust attempt to deprive the Soviet people of its fair share of the reparations. The Potsdam Conference of 17 July–2 August 1945 bypassed this latent disagreement with a reparations regime based on the agreed division of Germany into occupation zones: Soviet and Polish claims were met from the Soviet zone and from German foreign assets in Bulgaria, Finland, Hungary, Romania and eastern Austria, plus 25 percent of Western-zone industrial capital equipment, 15 percent in exchange for Eastern-zone raw materials and 10 percent free of return. The Potsdam Protocol provided that reparations removals 'shall be made by the control council under policies fixed by the Allied Commission on Reparations, with the participation of France, subject to the final approval of the zone commander in the zone from which the equipment is to be removed,' assigning the commission policy authority while zonal machinery effectively superseded it. French membership was a point of dispute: Stalin initially refused to admit France to full membership of the commission established in Moscow, and the Soviet Union withdrew its previous objections at Potsdam. The commission moved from Moscow to Berlin in conjunction with the Potsdam Conference, with the official decision to do so taken only on 25 September 1945 at the London conference of foreign ministers, so its effective end post-dates July 1945.

Distinctions

The Moscow Allied Reparation Commission must be distinguished from the Versailles-era 'Reparation Commission' established under Article 233 of the 1919 Treaty of Versailles, which fixed Germany's First World War debt. It is also distinct from the post-Potsdam Inter-Allied Reparation Agency: the governments of Albania, the United States of America, Australia, Belgium, Canada, Denmark, Egypt, France, the United Kingdom, Greece, India, Luxembourg, Norway, New Zealand, the Netherlands, Czechoslovakia, the Union of South Africa and Yugoslavia established on 14 January 1946 an Inter-Allied Reparation Agency, based in Brussels, to distribute assets agreed at Potsdam and by the Paris Agreement on Reparation from Germany of 14 January 1946. The Paris Agreement allocated percentage shares among the eighteen signatory states (Category A and Category B) but set neither a total amount of German reparations nor a time limit for their exaction and distribution, marking the shift from the commission's total-sum approach to proportional division of allocated assets. From March 1946 on, dismantling and transfer were administered by zone commanders, the Allied Control Council and later the Inter-Allied Reparation Agency, with Western dismantling ended by the Bonn and Paris Agreements and the Überleitungsvertrag, so the Moscow commission must not be conflated with the entire Allied reparations apparatus.

Examples

The commission's practical output included definitions of 'restitution' and (pending) 'war booty', the percentage formula for the three governments and procedures for determining other claimant nations' percentages, and an interim reparation plan. Pauley proposed dividing shares in percentages rather than money and defining 'reparation', 'restitution' and 'war booty', while declining to reach any fixed monetary total before a physical inventory of German assets. The commission's stalled format is visible in its internal procedures: Pauley asked for daily meetings of the three representatives and committee reports by 10 July 1945 ahead of the Big Three meeting, and the unresolved questions of shares for plant and equipment, external assets, war booty and ships were carried over to the October conference of powers and to the foreign ministers' meetings. After the deadlock the United States pressed for a new body, instructing its representative in September 1945 to attend the organizing committee of the 'Inter-Allied Reparation Agency' and to make clear 'that IAEA is only body which will allocate reparation deliveries from western zones.' The Paris Agreement of 14 January 1946 allocated percentage shares among the eighteen signatory states, for example United States 28.00/11.80, United Kingdom 28.00/27.80, France 16.00/22.80 and Yugoslavia 6.60/9.60.