(ii)  We  shall  not  be  likely  to  be  able  to  decide  on  the  timing  or  manner  of  our
intervention  until  after  Bermuda.  We  must  first  see  how  the  Franco-German  talks
develop  and  which  points  cause  special  difficulty.
(iii)  In  the  meantime,  we  would  wish  to  keep  in  close  touch  with  the  State
Department  with  a  view  to  having  concrete  proposals  ready,  if  it  proves  necessary
to  make  a  joint  intervention.
Background  -  The  Major  Issues
3.  M.  Schuman  proposed  in  1952  that  the  Saar  should  be  „Europeanized“  (i.e.
placed  under  the  trusteeship  of  some  European  body  such  as  the  Coal  and  Steel
Community  or  the  Council  of  Europe).  During  the  Summer  of  1952  he  discussed
this  general  concept  on  a  number  of  occasions  with  Dr.  Adenauer,  who  accepted  it
as  a  basis  for  negotiating  a  new  Statute  for  the  Saar.  The  negotiations  broke  down
in  October  1952  on  the  following  major  issues:
(a)  No  formula  could  be  found  to  reconcile  French  economic  interests  with  German
political  requirements.  The  French  have  all  along  insisted  that  the  Franco-Saar  economic
  union,  as  embodied  in  the  Franco-Saar  Conventions,  which  were  revised  this
year,  should  be  retained.  The  French  hold  that  the  maintenance  of  the  economic
union  is  essential  both  to  prevent  German  predominance  in  the  field  of  heavy  industry
  (coal  and  steel)  and  because  of  the  contribution  which  the  Saar  makes  to
France’s  earnings  of  foreign  currency.  Dr.  Adenauer  has  been  prepared  to  go  some
way  towards  recognising  and  meeting  France’s  special  economic  requirements.  But
he  has  insisted  that  Germany  should  have  equal  access  to  the  Saar  economy.  In  his
view,  the  French  proposal  would  simply  lead  to  the  perpetuation  of  exclusive
French  domination  of  the  Saar.  After  the  German  elections,  Professor  Hallstein  told
us  that  the  Chancellor  was  prepared  to  agree  to  the  retention  of  the  Franco-Saar
monetary  union.  But  recent  manifestations  of  nationalist  feelings  in  Germany  and
the  difficulties  he  has  been  having  with  his  coalition  partners  may  have  led  him  to
retreat  from  this  position.
(b)  Dr.  Adenauer  has  always  stressed  that  any  settlement  with  the  French  must  be
regarded  as  provisional  pending  a  Peace  Treaty.  We  agree.  He  has  in  mind  in  particular
  the  importance  of  not  prejudicing  his  Government’s  position  in  regard  to  the
Eastern  territories.  The  French  have  been  suspicious  of  these  reservations,  which
they  fear  might  enable  the  Germans  to  repudiate  an  agreement  if  it  suited  them  to
do  so.
(c)  Dr.  Adenauer  has  insisted  that  any  Franco-German  settlement  must  be  submitted
  for  endorsement  by  the  Saar  people,  who  would  express  their  views  through
a  new  Parliament  elected  in  conditions  of  full  freedom.  In  other  words,  the  socalled
  „pro-German“  parties  would  not  be  discriminated  against.  The  French  hold
that  such  elections  should  be  held  „within  the  framework  of  the  new  European
Statute“,  i.e.  all  political  parties  would  be  obliged  to  accept  the  general  principle  of

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