Memorandum, The Berlin Situation

THE BERLIN SITUATION The discussions in Moscow have reached the crucial phase. The fundamental issue from which all the difficulties encountered stem ie the Soviet insistence that the four-power control over Germany has lapsed and with it all rights of the occupying powers in Berlin. The specific points which have deadlocked the discussions, such as the four-power administration over the Berlin currency, stem from this basic issue concerning the rights of the Western Powers in Berlin. This point is so fundamental that it would probably require a further visit to Stalin before the discussions end. Ambassador Smith and the French and British representatives are probably seeing Molotov today and if, as we anticipate, Molotov repeate the Soviet assertion that we no longer have any rights in Berlin, they will request an interview with Stalin. While the discussions have not yet broken down, if the Soviets maintain their position that we have no rights in Berlin and are there only on Soviet sufferance and on the basis of such favors as the Soviet Government may choose to accord us, there will be a complete deadlock in the discussions. We feel the Soviet position is unacceptables (1) on the grounds that no one nation, party to a multilateral agreement, can unilaterally by mere assertion of alleged violations by STRENK the other parties declare null and void such multilateral agreements; ARCHIVES SERVICE (2) to pass over in silence this issue would be, in effect, to trade our rights in Berlin for the lifting or the blockade, which would render our position in Berlin much more difficult in the future and would unquestion- ably be exploited all over the world by Soviet propaganda as a great diplomatic victory (In this connection, you might care to mention that we have several reports from Europe that the Russians are informing their followers that a major Soviet diplomatic victory on Berlin is in prospect. This has