Project Safehaven (1944–48) was an intelligence program developed by the United States during the Second World War to prevent Nazi Germany and Axis partners of the Third Reich from hiding assets, in particular in neutral countries, for use after the war The program was designed and carried out by the US partnered with the United Kingdom and France. The program began in 1944 with Nazi defeat looming and evidence that Germany was covertly transferring sources of capital to neutral countries to escape war reparations and potentially aid a resurgence of the regime in the post-war period.
The central goal of Project Safehaven was to ensure Germany would not be able to start another war, with the specific aims of the program articulated in the spring of 1944. The short-term aims focused on identifying and locating German assets and blocking the transfer of German assets to neutral countries, and the long-term aims involved persuading neutral countries to turn over German assets as war reparations to ensure the restoration of Europe. The overall objective of the operation was to dissipate Nazi wealth in order to render any possible post-war resurgence controllable and to make it impossible for Germany to start another war.Korcaighe P. Hale (2009), "The Limits of Diplomatic Pressure: Project Safehaven and the Search for German Assets in Ireland", Irish Historical Studies 36(143): 389–406.
Project Safehaven begun with communications in May 1944 from the Foreign Economic Administration (FEA) to the U.S. Department of State and the Department of Treasury, with an interagency program put forward. Throughout the course of the project, interagency conflict existed regarding which of the three agencies was in charge.
The Bretton Woods Conference, which took place in New Hampshire in July 1944, assisted in building a legal base for the Safehaven project. The Bretton Woods Resolution VI was officially accepted on July 22. Resolution VI outlined aims stating that neutral nations were to take immediate action to prevent the transfer and concealment of assets from Axis locations to neutral countries
Negotiations took place between the Allied forces and the neutral nations concerning the Safehaven project's objectives. Germany depended on trade with neutral nations throughout the Second World War, importing numerous goods and raw materials from Sweden, Turkey, Switzerland, Spain and Portugal Bargaining over trade with Allied nations with the neutral nations was one of the economic warfare instruments used by the Allied nations to prevent the transfer of German assets to neutral countries.
Background
Allied Victory in 1945 was the result of the co-existence of a variety of factors. The success of the attack at Normandy on D-Day was of great significance for allied victory and forced the German Wehrmacht to defend the western front, diverting German resources from the eastern front, subsequently weakening the strength of the army. The initial assault on Normandy by the allies on 6 June 1944, also known as ‘D Day’, employed 50,000 troops and 12,000 aircraft to successfully capture beaches and consolidate positions in the Normandy pocket through aerial bombardment and barrage. By mid-July 1944, the allies were firmly established in Normandy and ready to break out, allowing them to liberate Paris in just 6 weeks on 25 July. D-Day and the liberation of France as a strategy were instrumental to the success of Operation Bagration, the Russian counter-offensive, which forced Hitler to open up new fronts. By the end of February 1944 Army Group North had been defeated and the German siege of Leningrad was lifted, a sign of the commencement of the Russian counter offensive. Operation Bagration, pioneered by General Zhukov was launched in June 1944 and employed 1 million men and 2 thousand aircraft to encircle and destroy the German Army Group Centre, which pushed the Germans into retreat and liberated eastern Europe. Allied bombing of Germany, which intensified in 1944, was also a successful program in the air war which forced Germany to divert soldiers and resources to the home front and focus artillery production away from offensive operations. This drained Germany's resources and weakened Germany's capacity to wage war whilst simultaneously placing the allies in a position of power.
Origins of the Safehaven Project By 1944, the Allied forces had a high likelihood of defeating the German Nazis, forcing them to start preparing precautionary measures, like Project Safehaven, against a resurgence of Nazi power. As allied victory had been secured, the United States wanted to ensure the Nazi's would never be able to regain power again. There were great fears within the US State department and the Central Intelligence Agency (CIA) of a fourth Reich being established by the Nazis in the future. Project Safehaven was established in response to these fears with its overall objective to conduct intelligence on the location of Nazi assets and wealth in an attempt to cease it and steer it towards allied powers.
The project was first proposed by the Director of the Foreign Economic Administration (FEA), Leo T. Crowley on May 5, 1944 in a letter to the United States Secretary of the Treasury, Henry Morgenthau Jr. Then on 15 May in a letter to Livingston T. Merchant, the FEA suggested an interagency program, collaborating with the British and other US agencies with a vested interest in the aims of the program to locate and intercept the transfer of German assets into neutral nations. In the letters, Leo T.Crowley, director of the Foreign Economic Administration, proposed an active investigation take place to identify the extent to which German assets were being moved to neutral nations.
Samuel Klaus, special assistant to the Treasury Departments Special Counsel, led an information-gathering trip to Europe to examine the situation in neutral nations Klaus and his associates travelled to Lisbon, Stockholm, London and other countries in Europe advocating for the adoption of the programs aims. The objective of the trip was to supply information to Washington regarding German efforts to transfer assets to neutral nations, which Klaus established in his final report in 1944. Inner bureaucracies between the Foreign Economic Administration, Department of State and Department of Treasury predominated the trip, at times the Treasury Department was deliberately excluded from participation.
The FEA, Department of State and Department of Treasury Discourse existed between the FEA, Department of State and Department of Treasury regarding who controlled the Safehaven project. The Special Areas Branch of the Foreign Economic Administration retained important information about the wartime economic activities of Germany and the neutral nations and proposed the initial idea of the Safehaven project. In 1944, a number of Foreign Economic Administration departments commenced formulating the program. Conflict arose between the Foreign Economic Administration and the Treasury and State Department as each agency claimed responsibility and authority over the program.
Bretton Woods Resolution VI
The United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, was held in July 1944 and involved forty-four countries. The conference was organised for the purpose of nations deciding upon a series of rules for the international monetary system post World War II. Three commissions made up the Bretton Woods Conference, with two commissions concerned with the final plans for the international monetary fund and with the primary interest of the Treasury and State Departments, the proposed World Bank, and the Stabilisation Fund. Commission III was concerned with residual matters, establishing various ad hoc committees, including a committee focused on enemy assets, looted goods and associated matters.
The French and Polish delegates submitted proposals to this third commission, with the Polish proposal calling on neutral countries to block and liquidate Axis assets and the French proposing steps be taken to prevent Germany from successfully secreting funds under false names in neutral nations. The United States presented an alternative draft proposal which incorporated features of both the French and Polish proposals, leading the Polish and French to withdraw their proposals. The British assistant undersecretary of state for foreign affairs, Sir Nigel Bruce Ronald, initially opposed the US proposal on the grounds that the subject of the proposal was outside the scope of the conference. A lack of opposition from other countries led Britain to relent in its objection. The final text was presented to the Plenary Session of the Conference and was officially adopted on July 22 as the Bretton Woods Resolution VI. The first aim of the resolution stated that neutral nations were to take immediate action to prevent the transfer of assets from Axis locations to neutral countries. The second aim stated that neutral countries were to prevent the concealment of German assets.
Resolution VI provided Project Safehaven with the legal base necessary to pursue its aims. In September 1944 the US sent directives to neutral countries as well as those nations that had partaken in the Bretton Woods Conference to stress the urgency in establishing procedures that would achieve the goals of Resolution VI.
Urgent action was taken by the US and Britain following the approval of Resolution VI. The British Ministry of Economic Warfare formed a Safehaven division that worked with American officials to merge the intelligence collected. The US and UK went on to direct their embassies in neutral countries to implement strategies that aligned with the goals of Resolution VI.
Methodology Project Safehaven was first conducted by gathering economic intelligence. In 1944 the US State Department invited the British Operations Support System (OSS) to collaborate and consolidate resources.
The Office of Strategic Services (OSS) and Project Safehaven
The OSS Office of Strategic Services (OSS) had been collecting economic intelligence since 1942 in efforts to acquire direct information on potential methods of German evasion of post war control. The responsibility of the Office of Strategic Services was primarily to assemble and analyse information gathered from the informants under its control. The Secret Intelligence (SI) Branch of the Office of Strategic Services was tasked with project Safehaven as information collection fell within the division's scope. The Office of Strategic Services counter-intelligence branch, X-2, acquired a central role alongside SI, due to the nature of the program as both an effort to stop post-war German economic penetration in neutral countries as well as a data collection operation.
The addition of the Safehaven project resulted in a redirection of classified information for the Office of Strategic Services, who had been gathering information on German economic activities to comprehend the war economy from 1942. Key Office of Strategic Services foreign stations located in Portugal, Switzerland and Spain, worked to uncover German efforts to obtain assets in neutral countries.
In April 1945, X-2 was operating in Switzerland and delivered a comprehensive analysis to the Office of Strategic Services in Washington detailing currency and gold transfers by Nazi's during the war that were arranged via Switzerland. In this summary, methods of transfers were described, including smuggling, undercover exchanges, sale of valuables and various others. X-2 reported in 1945 that warehouses in Sweden held German goods that had been transformed from 100 million Swedish kronor in gold and currency.