Alternatively, it has also been suggested that the U.S. should continue to withhold its permission to release the gold to increase pressure on the Czechoslovak Government to make a better settlement than the one we have negotiated. It is our firm conviction that such an action by the U.S. would not bring the Czechoslovaks promptly back to the negotiating table. We do not believe that the Czechoslovak Government would, in the foreseeable future, be willing to participate in new negotiations on the claims, particularly if they knew in advance that we would demand settlement in full of the claims in order to have the gold returned.

The Czechoslovaks are secure in the knowledge that the gold is theirs and that we have an obligation to return it. They have waited almost thirty years for its return and, while its value has increased. they are likely to be willing to wait a longer time if they consider our demands unreasonable. They consider that they have already made a major effort to meet our position in the negotiation. They regard the settlement as a major step forward taken to improve our relations. In our judgment they would react sharply and negatively if we repudiate the initialled settlement.

***

We believe that the claims settlement agreement initialled in July is highly satisfactory from the standpoint of U.S. interests. It is the most favorable settlement we have concluded with any Eastern European country during the postwar era. The Czechoslovaks have agreed to make payments totalling $20.5 million. With the $9 million which has already been distributed to U.S. claimants from the sale of the sequestered steel mill, the total settlement is $29.5 million. It is also significant that the Czechoslovak Government accepted our position that only the $9 million from the sale of the steel mill would be credited to the settlement instead of the $17 million that the Czechoslovaks paid for the mill. From their point of view that makes the total settlement equivalent to $38.5 million.

The $29.5 million amounts to about 42 cents on the dollar of the principal amount adjudicated by the Foreign Claims Settlement Commission. The payment rate compares favorably with settlements concluded with other Eastern European countries, such as Poland (39 cents) and Romania (37 cents). Moreover, it compares favorably with similar settlements reached by other Western European countries, one of which was as low as 9 cents, while few exceeded 25 cents.

The repayment terms are also more advantageous than other recent settlements. The repayment period is 12 rather than 20 years as is the case with settlements we have concluded with Poland (1960) and Hungary (1973). An accelerator clause, which I would emphasize is not tied in any way to granting most-favored-nation status to Czechoslovakia as in the Hungarian settlement, could further reduce the repayment period to approximately 8 years. Furthermore, the initialled agreement calls for a full settlement of U.S. Government surplus property claims of $7.0 million and it also commits the Czechoslovak Government to undertake negotiations

with U.S. holders of defaulted pre-World War II bonds within six months after the agreement takes effect.

*

Hearings before the Committee on Finance, United States Senate, 93d Cong., 2d Sess., Sept. 26, 1974. The Paris Agreement of 1946 referred to by Deputy Secretary Ingersoll is the 1946 Agreement on Reparation from Germany, on the Establishment of an Inter-Allied Reparation Agency and on the Restitution of Monetary Gold (TIAS 1655; 61 Stat. 3157; 4 Bevans 5; entered into force Jan. 24, 1946).

Section 408 of the Trade Act of 1974 (P.L. 93-618; 88 Stat. 1978; approved January 3, 1975) calls for the renegotiation of the agreement. It provides:

(a) The arrangement initialed on July 5, 1974, with respect to the settlement of the claims of citizens and nationals of the United States against the Government of Czechoslovakia shall be renegotiated and shall be submitted to the Congress as part of any agreement entered into under this title with Czechoslovakia.

(b) The United States shall not release any gold belonging to Czechoslovakia and controlled directly or indirectly by the United States pursuant to the provisions of the Paris Reparations Agreement of January 24, 1946, or otherwise, until such agreement has been approved by the Congress.

A summary of the Act prepared by the staffs of the Senate Committee on Finance and the House Committee on Ways and Means states, in its summary of 408, that "There must be a full and fair settlement before most-favorednation treatment will be granted." Trade Act of 1974: Summary of the Provisions of H.R. 10710, Committee Print, 93d Cong., 2d Sess., Dec. 30, 1974, p. 19.

U.S.-German Democratic Republic

On September 4, 1974, the United States and the German Democratic Republic signed an Agreed Minute on Negotiations Concerning the Establishment of Diplomatic Relations between the two Governments (TIAS 7937; 25 UST 2597; entered into force September 4, 1974). The Agreed Minute, in paragraph 10, contains the following provision on settlement of claims:

Following the establishment of diplomatic relations and the opening of Embassies, upon the request of either side, the two governments will enter into negotiations for the settlement of claims and other financial and property questions which remain unresolved, each government being entitled to raise during these negotiations the questions it wishes to have dealt with. Included on the Agenda will be property and other questions which arose prior to or since 1945 which have not otherwise been settled, including losses by victims of Nazism.

See also ch. 2, § 3, supra, p. 11; Ch. 4, § 1, supra, pp. 176-177; and Ch. 4, § 2, supra, pp. 179–180. Of particular importance to the United States is the agreement of the German Democratic Republic (G.D.R.) that losses of victims of Nazism may be raised. The G.D.R. agreed during the negotiations, which were held in Washington July 15-26, 1974, that a G.D.R. organization, the Committee of Antifascist Resistance Fighters, will be authorized to discuss this category of claims with the Conference on Jewish Material Claims. The Conference is the umbrella organization of Jewish organizations which successfully negotiated with the Federal Republic of Germany an agreement to compensate victims of Nazism.

U.S.-Hungary

Public Law 93-460 (88 Stat. 1386), approved October 20, 1974, amends the International Claims Settlement Act of 1949, as amended, 22 U.S.C. 1621, to provide for the timely determination of certain claims of U.S. nationals settled by the 1973 United States-Hungarian Claims Agreement (TIAS 7569; 24 UST 522; entered into force March 6, 1973; see the 1973 Digest, Ch. 9, § 3, pp. 336-337). The 1973 Agreement provides for the payment of $18,900,000 (in 20 equal annual installments of $945,000) by the Hungarian Government "in full and final settlement" of all claims of U.S. nationals against Hungary for war damage, nationalization, expropriation and other taking of property.

In the 1947 Treaty of Peace with Hungary, concluded between the Allied and Associated Powers and Hungary (TIAS 1651; 61 Stat. 2065; 4 Bevans 453), the Hungarian Government undertook to restore property owned by "United Nations nationals" in Hungary, or else provide compensation to the extent of two-thirds of the war damage suffered by it (Article 26). These undertakings were not honored, nor were U.S. owners compensated for property which was nationalized or otherwise taken subsequent to the 1947 Peace Treaty.

Article 29 of the Treaty provided that assets in the territory of each of the Allied and Associated Powers belonging to Hungarian nationals might be seized and liquidated and the proceeds used to pay the claims of citizens of the Powers. In 1955, Congress approved legislation (P.L. 84-285) authorizing the vesting and liquidation of previously blocked assets (worth $3,318,614) of the Government of Hungary and its nationals other than natural persons. The proceeds of these assets were placed in a fund in the Department of the Treasury and used to pay in part the outstanding claims (approximately $58 million) of American nationals against Hungary. Pursuant to the terms of P.L. 84-285, the Hungarian claims program was completed on August 9, 1959. It was not until 1965, however, that formal negotiations were begun to

obtain compensation for the balance of the claims, and on March 6, 1973, the United States-Hungarian Claims Agreement was signed. The 1974 amendments to the International Claims Settlement Act of 1949 implement the 1973 Agreement. Section 1 of the 1974 Act directs the Secretary of the Treasury to "cover into the Hungarian Claims Fund" sums paid to the United States by Hungary pursuant to the 1973 Agreement. Section 3 of the 1974 Act makes provision for the disposition of claims by U.S. nationals against Hungary that arose between August 9, 1955, and March 6, 1973.

Section 5 of the 1974 amendments insures that new awardees will not obtain a pecuniary advantage over previous awardees. It limits the extent of payments on new awards to the extent of the percentage paid on previous awards, and then permits the residual balance to be distributed proportionately among all awardees. Section 5 prohibits any further payments on war damage awards until all other awards have been paid in equal proportions as the war damage awards. Hungarian war damage awardees have received payments from the War Claims Fund, as provided in P.L. 87-846 (1962).

Section 5 also prohibits any further payments on awards based on Kingdom of Hungary bonds expressed in U.S. dollars, and awards to "Standstill" creditors of Hungary. Claims based on Kingdom of Hungary bonds expressed in U.S. dollars will be the subject matter of future consideration by Hungary and were not settled by the 1973 Agreement. Claims by Standstill creditors have been settled under a separate agreement concluded on December 5, 1969, between the Government of Hungary and the American Committee for Standstill creditors of Hungary. Section 5 prevents double payment on such claims.

Section 5 also makes provision for the payment to the United States of $125,000 in settlement of a claim arising out of the 1951 aerial incident involving a United States plane.

Senate Rept. No. 93–1095, 93d Cong., 2d Sess., Aug. 15, 1974, pp. 1-3. See also House Rept. No. 93-1027, 93d Cong., 2d Sess., May 2, 1974, and Hungarian Claims Legislation, Hearing before the Subcommittee on Europe of the Committee on Foreign Affairs, House of Representatives, 93d Cong., 2d Sess., Apr. 4, 1974. The Standstill creditors were U.S. banks and other lending institutions which lent money during the 1928-1931 period to similar institutions in Hungary. The 1969 agreement with the Standstill creditors reduced the unpaid claims figure of $58 million to about $55 million. A forty percent negotiating figure was applied (typical of that used in agreements with other Eastern European countries), thus reducing the total to about $22 million. The net figure of $18.9 million was accepted by Hungary in the 1973 Agreement.

569-769-75-29

The United States and Egypt, on July 16, 1974, exchanged notes (TIAS 7870; 25 UST 1431; entered into force July 16, 1974) for purposes of reactivating Overseas Private Investment Corporation (OPIC) programs in Egypt. The text of the U.S. note of July 16, agreed to the same day by Egypt, is as follows:

We have the honor to refer to the Agreement effected by exchange of notes between our governments on June 29, 1963, on the subject of investment guaranties which are issued by the Government of the United States of America.

The Government of the United States of America is pleased to advise that if your government agrees, the investment incentive programs of the United States of America which are the subject of the aforesaid Agreement and which are now referred to as investment insurance and investment guaranties and are currently administered by the Overseas Private Investment Corporation, can be resumed in connection with projects that are approved by the Arab Republic of Egypt.

The Government of the United States of America also agrees, if your government is willing, that when your government or an agency thereof has entered into a contract with a private United States firm for construction or other professional services to a project sponsored by your government, such a contract shall be considered the approval and agreement required by paragraph two of the exchange of notes dated June 29, 1963. In all other cases, individual project approvals and agreements by your government shall be requested.

We would appreciate receiving Your Excellency's confirmation that the foregoing is acceptable to the Arab Republic of Egypt. Accept, Excellency, the renewed assurances of our highest consideration.

The 1963 exchange of notes on investment guaranties, referred to in the text above, is at TIAS 5383; 14 UST 945. That agreement entered into force June 29, 1963. Par. 2 of the 1963 agreement provides that "The Government of the United States of America shall not guaranty an investment in the United Arab Republic unless the Government of the United Arab Republic approves the activity to which the investment relates and agrees that the Government of the United States of America may guaranty such investment."

U.S.-Nigeria

On August 3, 1974, the United States and Nigeria signed an Investment Guarantees Agreement (TIAS 8012; entered into force February 10, 1975) to replace the 1962 Agreement (TIAS 5237; 13 UST