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YES.Polish cryptanalysts broke Enigma ciphers in the 1930s - long before the British codebreakers at Bletchley Park did during the war. This achievement was one of the relatively obscure facts surrounding WW2.Now, I can simply stop here because apparently the question only asks for a yes/no response. However, that will be too boring and disappointing to those readers who are curious about exactly how Polish codebreakers unraveled some of the most formidable ciphers in the history of cryptography. Having read about the Polish code-breaking effort, I am thoroughly fascinated by a true story about extraordinary human ingenuity, determination, patriotism, and treachery that was every bit as praiseworthy and compelling as the endeavour of British codebreakers at Bletchley Park during WW2. It is a story that warrants an in-depth account.Thus, this answer is dedicated to recounting the achievements of Polish codebreakers (and to honouring a promise made to a Quora friend of mine!).Since every story has an underlying context, the same is true of the this story. Thus, for the sake of full understanding, I will recount not only the codebreaking endeavour of the Poles but also the historical context and the crucial characters involved in this story.Let the story begin!!!The Development of Polish Cryptanalytic ExpertiseThe year 1918 witnessed momentous developments in Europe. It marked the end of the Great War and the beginning of a period of political turmoil that would dramatically transform Europe.The situation was particularly dire for Poland. The Bolshevik revolution was sweeping across Russia, precipitating the country into a civil war between the Communist and Imperial factions. Unfortunately for Poland, Lenin’s determination to annex Poland and turn it into a Communist satellite state led to the Polish-Soviet War in 1920.The intrusion of Soviet forces into Poland and the spectre of a Communist domination prompted capitalist European countries to form a military coalition to support Poland in the struggle against Soviet aggression.Despite this multinational military support, the Poles knew that they could not rely completely on foreign intervention to repel the Soviet invaders. They had to do some of the fighting by themselves. Because their resources were limited and their military was relatively small, they had to employ those assets intelligently. How could they do that? - by deploying their forces at the right place at the right time. The only way to accomplish that was to determine in advance Soviet military intentions => Polish military intelligence was born.The first capability that it developed was radio intelligence. The widespread use of radios by the Soviets to maintain communication between the front lines and their distant HQs filled the air with radio signals that represented coded messages.One aspect of radio intelligence was traffic analysis which involved analyzing directions from where messages emanated. This provided information about calls signs and some hints about unit dispositions and movements. This allowed the Poles to deduce with some degree of accuracy what the Soviets might do. But as you can guess, intelligence revealed by traffic analysis was wholly inadequate in many situations where full knowledge of enemy intention was crucial for Polish commanders.Thus, the decryption of Russian enciphered messages became the top priority for Polish intelligence. Three Polish officers would play a critical role in this effort: Jan Kowalewski, Maksymilian Ciezki, and Antoni Palluth.Jan KowalewskiKowalewski was highly instrumental in the establishment of Polish intelligence. He not only turned Poland into a world-leader in cryptanalysis but also implemented an innovative approach to codebreaking. Being an engineer, Kowalewski was convinced that code-breaking was amenable to mathematical analysis. So he recruited mathematicians for his team. This was arguably an unprecedented step in cryptography because prior to this, code-breakers were predominantly linguists.Kowalewski’s innovative approach to cryptanalysis quickly proved its worth. Soviet ciphers were broken quickly. This revealed almost everything: orders of battle, dispositions of units, and even details of a new cipher system the Soviets were going to use.The power of mathematical analysis in codebreaking was vindicated on 12th August 1920. On that day Polish radio intelligence intercepted a message several pages long and was encrypted using a new cipher system. Kowalewski’s team rose to the challenge by unravelling the new cipher in just one hour. Although they could not decipher the message completely, what they uncovered was more than enough to alert the Polish army to an impending Soviet offensive directed at Warsaw on 14th August 1920.Armed with this actionable intelligence, the Polish high command quickly ordered the jamming of Russian radio communication between front line forces bound for Warsaw and HQ in Moscow. This served to delay the Soviet offensive, giving the Poles a few more days time to prepare defenses. When the Soviets arrived, they faced determined and skillful Polish opposition. The battle ended in a decisive Polish victory that were referred to as Miracle on the Vistula.A Soviet telegram signed by Stalin and deciphered by Jan Kowalewski’s team during the Russo-Polish war.The Polish government appreciated the role military intelligence had played in the Polish-Soviet War, and in particular Kowalewski’s pioneering mathematics-assisted approach to code-breaking. The need for a dedicated code-breaking organization was heightened in light of the awareness that for centuries Poland - being surrounded by Germany in the West and Russia in the East - had been subjected to many acts of aggression by both military powers. Knowing that they could not compete with either nations in military strength, the Poles determined to compensate for that weakness with world-class code-breaking prowess that would enable them to employ their assets intelligently against the Germans and Russians in a future conflict. This situation gave impetus to the establishment of the Biuro Szyfrów - Cipher Bureau.The codebreakers at the Cipher Bureau regularly intercepted and broke foreign coded radio messages. The Poles were particularly interested in German ciphers. They knew that the Germans - having lost the Great War - would seek to avenge the humiliation of that defeat by planning for another war.Initially, the Poles were successful in breaking German cipher. In the German section of the Cipher Bureau, the Poles had employed standard techniques in a book written by Marcel Givierge - a French army general and cryptographic expert. He directed French military cryptanalytic effort in the Great War. He left his mark by devising cryptographic techniques during the war and publishing them for everyone to read.Drawing on the book, the Poles had been able to break German coded messages, including the doppelwürfelverfahren (double dice) cipher system - which presented the greatest challenge for the Poles. The double dice system worked by shuffling the letters of a message twice, each time using a predetermined scheme (analogous to a huge anagram). Although the double dice system was sufficiently described in Givierge’s reference book, breaking double dice ciphers was not trivial and required considerable efforts. But it was at least within the bound of human effort and the Poles had notable success in breaking double dice.However, this period of success would come to a halt in 1928 when the Poles encountered a complete new cipher that defeated all standard codebreaking techniques.Let’s conclude this section with a brief introduction of 2 of the aforementioned figures in Polish intelligence.Maksymilian Ciezki was a career army officer who served in Kowalewski’s team during the war and went on to work for the Cipher Bureau. He discharged his duties well enough to earn a high mark from Kowalewski on his appraisal form. Ciezki would go on to become chief of the German section in the Cipher Bureau and oversee the cryptanalysis of Enigma ciphers in the 1930s.Antoni Palluth had a passion and a remarkable aptitude for radios. He had served in radio intelligence during the war, engaging in radio interception and traffic analysis. After the war, he joined his friends to found AVA Radio Company - a small company specializing in making all kinds of radio equipment for the Polish military. But he was no regular entrepreneur. He was on the payroll of Polish intelligence service and pursued all kinds of clandestine activities under his guise as a factory manager, the foremost of which was codebreaking. In fact, he occupied a position in the German section in the Cipher Bureau overseen by Maksymilian Ciezki. His company would later create the technologies designed to break Enigma.The mysterious German cipherIn reality, the Poles encountered the new cipher in Feb 1926 when they intercepted messages sent by the German Navy. The new cipher used to encode them was evident just by looking at the messages. The streams of coded letters showed no discernible patterns similar to any known patterns. In fact, the letters appeared completely random and in nearly equal frequency. The Poles had no doubt that they had come upon a new form of cipher. What’s more? Judging by the apparent randomness and equal frequency of the letters, it was most likely that the messages were generated by a machine.This was an unpleasant but unsurprising realization for the Poles. They knew from the reference work of Givierge that mechanical ciphers would replace manual ciphers. But at the same time, their inability to break the new cipher did not concern them because the German navy was of little interest to them. The threat to Poland’s national security came primarily from the German Army whose ciphers the Poles had been able to break.That would change in 1928 when the German army followed suit and employed the new cipher. This frustrated all Polish attempts at uncovering German military secrets. The Poles became anxious about the future of their country as they appreciated the consequences of their failure to read German military communications.Polish Intelligence had heard that the enciphering machine was called Enigma. But they had never seen one. This machine was invented by German engineer Arthur Scherbius to provide commercial businesses with a tool to protect confidential information. It was an ingenious contraption that had a very simple mechanism. I described meticulously how the machine worked in this answer.How exactly did the Enigma machine work? How did the plugboard and the rotors change the letters?Now, Enigma machines were available on the market. The Cipher Bureau acquired a few Enigmas, disassembled them to study their enciphering mechanism. However, this knowledge did not help them break coded messages of the German military. The reason could be inferred from the marketing material of the Enigma’s Company which stated that the company could tailor the rotors to the specification of individual customers. Thus, it was safe to assume that the German Army had requested the company to make custom rotors that were different from those in the commercial version as well some other modifications to make the military variant more difficult to break.The challenge confronting the Poles appeared to be insurmountable. But there was hope. Kowalewski had just returned from Japan (on a mission to help the Japanese improve their own cryptographic system). Since Enigma was a mechanical cipher, he reasoned that a mathematical mind would be better suited to break it. So he requested that mathematicians be recruited for the Cipher Bureau.Fortunately for Kowalewski, he would get precisely the mathematical talent that would break the Enigma.The Polish MathematiciansThe 1920s witnessed the flourishing of Polish mathematics with the establishment of world-class mathematics departments at some universities.One such university was Adam Mickiewicz University in Poznań. It was here that three brilliant Polish mathematicians would be recruited for the Cipher Bureau. They were Marian Rejewski, Henryk Zygalski, Jerzy_Rozycki.Of these three, Marian Rejewski was the most talented would play a critical role in breaking the Enigma.Marian Rejewski was born into a middle class family. In his youth, he was a studious and high-achieving student at a German-speaking school. He displayed an inclination and remarkable aptitude for mathematics. His father - the owner of a going concern - hoped that Marian would follow in his footsteps. But Marian’s uncle - a gifted mathematician - persuaded him that a mathematics degree would assure him of a prosperous career in the insurance industry.So Marian decided to study mathematics in university. He attended Poznan University - an institution that boasted a first-rate mathematics department. It was here that he met and befriended Jerzy Różycki and Henryk Zygalski.One day in 1928, at the end of a lecture, professor Zdzisław Krygowski - a noted mathematician - requested Rejewski, Rozycki, and Zygalski to stay in the classroom to discuss something important with them.Professor Krygowski told them:There is a fascinating project I think all three of you might enjoy - as you seem to be more interested in crosswords and puzzles. I also trusted we are all loyal to the Polish cause.There is a man I would like you to meet. He is from the Polish Government. His Department is seeking to recruit talented mathematicians who they trust and who are fluent in German as soon as possible. I have been asked to recommend my most talented and trusted students for a study of the utmost importance to the Polish cause. I don’t know any more than that… interested?Jerzy responded impulsively: “Of course”. His two friends were a bit dubious, but Jerzy’s response inclined them to nod in agreement.These three students were about to be initiated into the obscure world of cryptography. One day, the three students came to a small room dimly lit room. A sense of anxiety gripped as a man greeted and spoke to them.The following conversation unfolded between them.Man: So here I have Marian Rejewski, Henryk Zygalski, and Jerzy Rozycki. I trusted you are each loyal to Poland?They nodded in response. The man continued: “What is your view on recent events in Germany?”Henryk responded quickly: “It is a matter of concern to me. I believe it is only a matter of time before Poland is invaded by Germany. It is inevitable that they will seek to re-incorporate us into their empire.”Man: “Do you not think that Germany’s expansionist ambition has been extinguished?”Henryk: “No. I believe that the current economic situation in Germany can only serve to intensify resentment against the Allies. If the current situation is not resolved, a further war, in my view, is inevitable. And if that happens, I am certain that the security of Poland will be jeopardy.”Man: “And would you welcome a return to German domination?”Henryk: “Of course of. Poland must remain free”.Man: “I see. And is Mr. Zygalski’s view shared by you all?”Marian and Jerzy nodded.The man then identified himself: “Good. Allow me to introduce myself. I am Major Maksymilian Ciezki of the Cipher Bureau. I am in charge of the German section. Our function is to intercept coded messages from Germany and decode them. Our bureau operates in the utmost secrecy. I am not in uniform because I am here today in connection with a matter that required discretion.I apologized for my questions. Can I be clear then that each of you supports a free Poland? Think carefully before you answer. If you choose to continue, you may place your lives in danger.”His words sent chill down the spines of the three men. But being patriots, the three men agreed to commit themselves to the task.Maksymilian: “Excellent. My department have decided to take a fresh approach to our work. We are seeking talented and motivated mathematicians. We want to train them in codebreaking. This is a completely new concept. You three have been recommended to me as outstanding students. We are concerned about certain messages that we have intercepted but been unable to decode. My office decided that mathematics students fluent in Germany may be able to overcome this challenge.There is a limited amount of information I can give you at this stage. What I can tell you is that in 1926, the German Navy began using a type of code we could not recognise. The German land forces started using the code in 1928. Our experts have concentrated on breaking this code but to date have not been able to make any progress.We are convinced that the coded messages are being generated by a mechanical device. We are certain that Germany is rearming. Poland will inevitably be one of their first targets. Our national security is threatenedThe government and I are formally inviting you to participate in our training programme, which will commence as soon as possible. This would involve attending a course for two evenings a week in cryptology.It is imperative that you maintain utmost secrecy both concerning the existence of the course and your participation in it. In addition, you will be required to keep up-to-date with your ongoing university studies. The professor has insisted upon that.There must be nothing that could draw attention to any of you. In addition, you will be required to sign documentation confirming your agreement to maintain confidential state secrets. You must understand that signature of these forms imposes serious obligations upon you and that any breach would result in repercussions of the most severe nature.”Maksymilian’s serious tone struck a measure of apprehension in Rejewski, Różycki, Zygalski. But at the same time, the challenge piqued the curiosity of the three students.After signing all documents necessary to obtain security clearance, they began their training in cryptology in earnest. In the end, only a few students, including Marian, Jerzy and Henryk, managed to complete the courses and their mathematics program. Marian was the best among them who graduated with distinction. Maksymilian invited them to work for the Cipher Bureau. However, there were no well-paying jobs for cryptologists. Plus, Marian had intended to pursue a career as an actuary. So he decided to go to Göttingen to receive further education. But before he departed, Antoni Palluth had one last secret to share with him and other graduates of the cryptology course.In a small room, Antoni showed the men a machine that looked like a typewriter.Pay attention, gentlemen. This is an electromechanical rotor cypher machine. It was invented and patented in 1919 by a Dutchman named Hugo Koch. In 1923, a Berlin engineer named Arthur Scherbius established a company to produce the machines. Scherbius had envisaged that the machine — which he called Enigma — would be of interest to companies who required secret correspondence to preserve confidential trade information. It was for this purpose that the machine was advertised and sold.However, we believe that this machine, or at least a modified version of it, is being used by the German forces to transmit messages. It is a device that has confounded the best minds in the world.As you will remember from the earlier lectures here, previous types of cyphers have generally been solved through searching for repeat patterns. That method is ineffective with the Enigma.That is why we selected mathematicians to train in codebreaking. This machine has added a whole new dimension to the craft of cryptology. We are convinced there is a mathematical solution to the problem.Marian surely was excited by the Enigma. After studying in Gottingen for one year, he became bored and decided to go to Poland to work on the Enigma cipher.But there was a problem that even Marian’s mathematical brilliance and determination could not overcome. As noted before, the German military was employing a specially modified version of the Enigma that was markedly more complex than the commercial Enigma that Antoni had revealed to the Polish cryptologists. Without knowing the internal wiring of the military model of the machine, it was practically impossible for the Poles to decode Enigma ciphers.In a stroke of incredible luck and irony, the Poles would get help from a citizen of their country’s future enemy.A German TraitorOn November 2nd 1931, agents of the French secret service held a meeting in Paris. The meeting revolved around an offer of top secret information by a German agent.Captain Gustave Bertrand fired prodding questions at his operative Rodolphe Lemoine to test his confidence.I understand that this man is of impeccable reputation. H.T.S, a civil servant of rankin the German Secret Service. Married with two children. A man who fought for German in the Great War. What is more, his brother is highly ranked in the German Army. Surely this man is better qualified to be a double agent than a traitor? What possible motivation can he have? I cannot see how we can justify funding this project.Lemoine delivered a calm and convincing response:But you have not had the opportunity to meet him in person. I have. He is desperate for money. What could be simpler? I assure you, gentlemen, I have spoken to Herr S. at length regarding his motivation for contacting us and I have no doubt that having himself been betrayed by his native country, he is more than willing to become a mercenary for our cause. He has a price and if we will pay it, we will have his unfailing loyalty.Reassured by Lemoine’s response, captain Lemoine granted his approval. The other agents also expressed their agreement.Captain Bertrand firmly stated:The funding of this project will stretch our budget to the limit. I want to be certain it is worthwhile. I will accompany you to the meeting scheduled for next week. I want to assess this gentleman in person. This operation will be given the highest level security clearance.Who was H.T.S exactly?Hans-Thilo SchmidtBorn in 1888 in Berlin, Hans was the second son of an eminent professor and his wife who was descended from the Prussian aristocracy. Schmidt enlisted in the German Army and fought in the Great War. After the war, the Treaty Of Versaille limited the German Army to a maximum of 100,000 men and prohibited it from having offensive weapons.The small size of the Reichswehr increased the selectivity of its officer corps. Only the best candidates qualified for the small number of posts available. Because Hans Thilo Schmidth wasn’t deemed good enough to be retained, he was dismissed - much to Hans’s humiliation. He then tried to make a living as an owner of a soap business. But the post-war hyperinflation destroyed his business, precipitating his family into poverty.The humiliation caused by this reversal of fortune was exacerbated by his resentment towards his elder brother - Rudolph Schmidth. Like Hans, Rudolph had fought during the Great War. Unlike Hans, he was retained by the Army. Not only that, he rose through the ranks and reached the pinnacle of success through the appointment as Chief of Staff of the Signal Corps. In this capacity, he oversaw all aspects of secret communications, including cipher systems. In fact, it was Rudolph who sanctioned the Army’s use of Enigma cipher.Following the collapse of his soap business, Hans-Thilo was forced to ask his brother for help, and Rudolph offered him a job at the Chiffrierstelle in Berlin. The Chiffrierstelle was no ordinary organization. It was the cipher department of the High Command of the Wehrmacht - responsible for administrating Germany’s secret communications. It was Enigma’s command center, a top-secret facility dealing with highly sensitive information.The job required Hans to relocate to Berlin and leave behind his family in Bavaria because of the high cost of living in Berlin. So Hans Thilo Schmidt ended up living alone in expensive Berlin, impecunious and envious of his perfect brother and resentful toward a nation which had rejected him. He resolved to avenge this humiliation. He decided that the best way to fulfil this aim was to sell classified Enigma information to Germany’s enemies. This would not only allow him to earn a lot of money but also undermine Germany’s national security.This set the stage for a top secret exchange with French Secret Service.On 8th November 1931, Schmidt arrived at the Grand Hotel in Verviers, Belgium to meet French secret service agents. Inside a room, Captain Bertrand carefully studied Hans and his documents. After convincing himself of the authenticity of the documents, Bertrand began talking to Schmidt.“You have the money here?” - asked Schmidt.When Captain Bertrand presented a suitcase containing cash before Schmidt, he exhaled in relief.Schmidt revealed his repressed thoughts: “I fought in the Great War, for Germany of course. I was injured. After the war, there was no work for the injured soldiers. I had to apply for dole money. I risked my life for my country then I was left to starve on the street with my family. I had to beg and borrow money for food.”Captain Bertrand: But then you found work.Schmidt replied bitterly: “Yes, work, and I was paid a pittance. Not enough to feed my family. There is rocketing inflation in Germany. It was insulting. The High Command, like my brother, live like aristocracy. They never went near the front line. They didn’t risk lives.Smidth carried on, in a flat one: “Germany betrayed me. Now I will betray Germany.”Bertrand’s doubt about Schmidt’s reliability vanished. It was clear to him that the German had succumbed to greed and that as long as the French secret service could supply money, Schmidt would provide them with a direct link to Enigma.The result of that meeting was a set of photographs of two top secret documents1/ gebrauchsanweisung für die chiffriermachine enigma (instructions for using the enigma encryption machine)2/ Schlüsselanleitung für die Chiffriermaschine Enigma (key instructions for the Enigma cipher machine)These documents were essentially instructions for using the Enigma machine. Although they did not describe the internal wirings of the machine, they contained the information from which those wirings could be deduced.Thanks to Schmidt’s treachery, it was now possible for the French to create an accurate replica of the German military Enigma machine.However, despite this valuable information, the French were unable to make any progress on breaking Enigma. The reason was they did not have the code book containing key settings for the Enigma. This was a problem made possible by a fundamental principle of cryptography: The strength of a cipher system consists not in keeping secret the enciphering mechanism but in keeping secret the keys.Indeed, this explained the Germans’ overconfidence in the Enigma. They knew that as long as they could keep the keys from falling into enemy hands, they would prevent them from reading Enigma-enciphered messages.So the French did not take advantage of the information supplied by Schmidt. They did not even bother making an Enigma replica because it would still be useless without the keys.Also, the French had become complacent. Germany at that time had not yet emerged as a military threat so they had no interest in breaking Enigma ciphers. The same could be said of the British who had not regarded Germany as a threat.However, there was one nation that could not afford to be complacent: Poland. The Poles at the Cipher Bureau were desperate for any information related to Enigma they could get. As luck would have it, France and Poland had signed an agreement for military cooperation which obliged both nations to help each other in all matters of national security. So the French offered Schmidt’s information to the Poles who eagerly accepted it. The Poles constructed an Enigma replica and proceeded to find a way to break Enigma ciphers in earnest.Polish Codebreakers Tackled EnigmaStarting in November 1932, Marian Rejewski set about breaking Enigma ciphers. Captain Maksymilian supplied Marian with the following materials:A commercial Enigma.A copy of the operating instructions originally provided by Hans Thilo Schmidt.In addition, Marian had at his disposal hundreds of coded messages intercepted by Polish signal intelligence. He spent hours examining these messages and identified one thing they all had in common: a group of six letters that appeared at the top of every message as illustrated below:(Each piece of info in the 1st line was interpreted as follows:1/ 1230 = 12h30 = the time at which this message was produced.2/ 3tle = this message consisted of 3 parts of of which this was the 1st part (1tl)3/ 180 = this message contained 180 characters.4/ WZA RSL = the characteristic 6-letter group)What did those six letters represent? Marian deduced correctly that they were the message keys that were repeated twice. A message key was referred to as an indicator. They were generated based on the key setting defined in an Enigma key book. All German army units were periodically issued (once a month) with key books that contained lines of key setting for a particular day in a month. A key was composed of the following elements:The arrangement of the three rotating rotors.The plugboard for swapping keyboard inputs.The ringstellung - ring position.The ringstellung warrant some elaboration. Enigma rotors came in 2 versions: those with a ring of numbers (1-> 26) and those with a ring of letters (A-Z). A ringstellung = a specific letter/number for each rotor forming a sequence visible through the rotor windows.Rotors with alphabetic letter-ringsRotors with number ringsLeft: a key book showing key settings for rotors with number rings. Right: a key book showing key settings for rotors with letter rings.Now, although the Germans could have used the same key to encipher all messages, they were discouraged from doing so because using the same key to encrypt numerous messages would increase the risk of the key being uncovered by the enemy. Instead, Enigma operators were advised to choose a unique indicator for each message, then encipher this key using the daily key.So for instance, if on a given day the ringstellung for the key of that day was YHZ (from the key book), then an operator was not supposed to use YHZ as the key for any message he produced. Instead, he was supposed to do the following steps:Choose a unique key for every message, let’s say WAK.Encode WAK using the predefined ringstellung YHZ which would yield, say OLQ (from the lampboard).Write OLQ at the top of the message.Adjust the rotor to WAK and then began enciphering the main message.But that wasn’t enough. A message transmitted via radio could be corrupted by various causes. So the Germans decided to encrypt an indicator twice as a way to verify that the key was not distorted during transmission. So WAK would be encrypted twice using YHZ to become, say AHWTFS. This 6-letter group would be placed at the top of a message. Enigma operators who received this message would first set the rotors to YHZ (the predefined ringstellung), then type in AHWTFS. If he got WAKWAK, then they knew that the key for that message was WAK. They would adjust the rotors to WAK and proceed to decipher the message. Note how the decoding process was the mirror image of the encoding process. This was made possible by the reflector - the leftmost fixed wheel in the illustration below.Unbeknownst to the Germans, by encrypting the message keys twice, they unwittingly gave Marian a way to break Enigma ciphers.Here is howMarian was convinced that there existed a relationship between those 6-letter groups and the ringstellung on a given day, and that with sufficient tenacity and wit he would find a way to determine key for that day. So he directed his attention towards those 6-letter groups. He would gather as many of them from the messages intercepted on that day. One example was shown below:An illustration of the 6-letter repeated encrypted indicator that Marian would examine on a typical dayMarian scrutinized those letters for hours, trying to find a pattern. Eventually he had a crucial realization.Since the 6 letters represented the indicator repeated twice, there was a positional relationship between the letters. Specifically:The 1st and 4th letters = cipher letters of the plaintext indicator’s 1st letter.The 2nd and 5th letters = cipher letters of the plaintext indicator’s 2nd letter.The 3rd and 6th letters = cipher letters of the plaintext indicator’s 3rd letter.This insight led him to form tables relating the above pairs of letters. For example, one table may look like this.He studied those tables of relationships. Eventually he discovered an interesting pattern: disjointed circular chains of letters. One such chain was: (ek)e (1st row) -> k (2nd row) -> k (1st row) -> e (2nd row) = (ek)Repeating this process for other letters will yield the following circular chains.(atuvmsidwpxy)(bfjgol)(crzh)(ek)(qn)Marian referred to these disjointed chains as the characteristic set of a given day. Take note of this important fact.Marian’s next insight was that each of the cipher letters and consequently the chains of letters were the results of permutations. This followed immediately from the mechanism of the Enigma which consisted in:Transposition (the rotor replaced an input letter with another letter through an electrical pathway).Swapping (the plugboard swapped the input letter with another one).The implication? The encipherment could be modelled by mathematical equations - especially permutation equations. What’s more? The solution to those equations would reveal the ringstellung which would lead to complete decipherment!Marian found himself with a mathematical puzzle - precisely the kind of challenges that he loved and for which he was well equipped to tackle. At Poznan university, he had studied Group Theory under professor Krygowski. One subject of this branch of mathematics was combinatorics. It was a course he thoroughly enjoyed and he would now apply the knowledge to this puzzle.Each cipher letter was generated by a permutation process which always turned a letter into a different one. There were 6 cipher letters so there were 6 corresponding permutations. Let’s label them A,B,C,D,E,F.For example, permutation A could be (letters in the 1st row were turned into the corresponding ones in the 2nd row)This permutation be written in terms of characteristic sets.A = (admqzb)(c)(enpvjhrt)(fiwoy)(glksxu)Although Marian did not know the individual permutation, he did know the results of the pairwise products of the permutations A,B,C,D,E,F.Specifically,AD = characteristic sets of the (1st, 4th) pair.BE = characteristic sets of the (2nd, 5th) pair.CF = characteristic sets of the (3rd, 6th) pair.Marian came up with and demonstrated a number of theories about permutations. I will present only the most relevant theory.Given a permutation composed of an even number of disjoint circular chains, then this permutation can be expressed as a product of two permutations of the same degree, where each permutation also consists of disjoint cycles.Let’s look at a concrete example. Suppose that Marian found the following characteristic sets from the many intercepted messages:AD = (lwpmv) (tzeqn) (arh) (kiu) (sfj) (gxy) (b) (c) (o) (d) (number of disjoint cycles = 10 so degree = 10)BE= (ohfrlt) (qsyizj) (amceu) (ndxpv) (kb) (gw) (number of disjoint cycles = 6 so degree = 6)CF= (cqelbosptnfkj) (uhzaydxvrgwim) (number of disjoint cycles = 2 so degree = 2)It was possible to determine individual permutations A,B,C,D,E,F using Marian’s Theorem. For the sake of simplicity, let’s demonstrate this with a simpler example:AD = (adf)(bef)(c)(g) (degree = 4)One possible solutions is[math]A = (ah)(de)(fb)(cg)[/math] and [math]D = (hd)(ef)(ba)(cg)[/math](A and D each had degree = 4)(a->h (in A), h-> d (in B) => a->d (in AB). d->e (in A), e->f (in B) => d->f (in AB). This completes the cycle: (adf)Another solution is:[math]A = (ae)(db)(fh)(cg)[/math] and [math]D = (ed)(bf)(ha)(cg)[/math]Cool huh?Marian applied the above procedure to figure out all possible solutions for A,B,C,D,E,F. You can imagine that at the beginning, he had to manually calculate everything - a tedious process until he invented a machine that automated this process.The next two crucial insights Marian had that came of painstaking scrutiny of the characteristics sets and from trying various rotor settings were:the cycle structure of the characteristic sets depended entirely on the rotor setting AND not the plugboard.The characteristic sets AD, BE, CF produced by a specific rotor setting were nearly unique.(The cycle structure = the sequence of chain lengths where a chain length = number of characters in a cycle. So this characteristic set (ohfrlt) (qsyizj) (amceu) (ndxpv) (kb) (gw) has the following cycle structure (6)(6)(5)(5)(2)(2))As regards the 1st discovery, this makes sense because the plugboard only swapped letters so it could not have any effect on the number of links. This was a very consequential discovery because the permutation by the plugboard has the largest value when 10 swapping cables were used (the standard number used during the war): 150,738,274,937,250: > 150 trillions.By contrast, the permutation associated with the rotor setting was only 6 x 26 x 26 x 26 = 105,456 (6 = 3! = number of ways of arranging the 3 rotors and 26 = number of letters (or numbers) on each of the 3 rotors)The implication? Marian only had to examine the characteristic sets produced by each of the 105,456 rotor settings. Although that was still a fairly large number, it was at least manageable and certainly within the bound of manual labor!!! With this crucial insight, the seemingly insurmountable challenge now became solvable.The second insight was very telling because it implied that from the characteristic sets we could identify the rotor settings. It followed that if Marian could create a catalogue that mapped a rotor setting to a cycle structure, then he would be able to uncover part of the key setting for the Enigma.So Marian and his colleagues set about cataloguing the characteristic sets produced by each of the 105,456 rotor settings. This endeavor took about 1 year to complete: laborious but certainly worth the time and effort.The biggest challenge was finally solved. But there were still other parts of the daily key that Marian need to figure out.One was the internal wiring of the rotor. Thanks to Hans Thilo Schmidt, Marian was able to deduce the wirings of all three rotors from the documents the German traitor had given away. Marian fully recognized the enormous value of Hans’s documents through his remarkAsche’s documents were welcomed like manna from heaven, and all doors were immediately opened.(Asche was the codename of Hans Thilo Schmidt. Due to the need for absolute secrecy, Hans’s identity was never disclosed to anyone).The next piece of the puzzle was the static wheel that stood between the plugboard and the rightmost rotor:This drum also had 26 pins for 26 letters each of which was connected to a letter on the keyboard. Now, 26 letters so the number of possible permutations was 26! = 403,291,461,126,605,635,584,000,000 (27 digits) - a huuuuge number. Which permutation did the Germans choose for the drum?Incredibly, Marian found the permutation through a combination of reasonable guess + luck. First, Marian tried the permutation used for the commercial Enigma. It did not work. He tried other permutations but to no avail.Then he thought:The wiring of the keyboard to the entry fixed drum. Initially I assumed that the wiring on the machine matched that of the commercial Enigma. I was wrong. Once I realized my mistake I spent considerable time trying to deduct the order of the letters on the fixed drum. Then I recalled my time at the German-speaking school. My German teachers were always ordered and logical. So I thought to myself - if I possessed a German mind, how would I set out the order of the letters? I guessed the order of letters was alphabetical(i.e: a is connected to a, b is connected to b, … z is connected to z)IT WORKED!!! Much to the surprise of Marian.So the only unsolved piece that remained was the plugboard. Surprisingly, determining the swapping pairs was very easy. After determining the rotor settings for a certain day, Marian would set the rotors accordingly and typed in the ciphertext without any swapping cable. The resulting plaintext message would obviously be gibberish composed of misspelt words caused by the letters not being swapped.Being fluent in Germans could, Marian could see which letters needed to be swapped to correct the words. For example: the phrase “akkact ak dawn” was “attack at dawn” meaning that letters k and t needed to be swapped. So a cable connecting k and t needed to be plugged in. Eventually, Marian would be able to figure out all the swapping and the plaintext message would be revealed.And that - ladies and gentlemen - was how Marian Rejewski broke Enigma. Although several members of the Polish Cipher Bureau (and ironically: Hans Thilo Schmidt) deserved credit for this success, Marian was the genius who deserved the greatest credit. It was only through his ingenuity and mathematical talent that the supposedly unbreakable Enigma was broken. With the catalogue mapping rotor settings to cycle structure completed, the Cipher Bureau began uncovering large numbers of German military messages on any given day. When a German miltiary delegation led by Hermann Göring visited the Tomb of the Unknown Soldiers next to the building of the Cipher Bureau, Marian looked down at them, delighted in the knowledge that he could read their most secret communications.I will conclude this section with one very interesting fact. In several meetings with Major Gwido Langer - the Cipher Bureau’s chief, Hans Thilo Schmidt gave him not only operating instructions for the Enigma but also the key books. This exchanged lasted almost 7 years. But Langer never gave the key books to Marian Rejewski and his colleagues. This begs the question: why didn’t he share the keys with the codebreakers? It would have saved them a lot of effort and time.The answer was: the astute Langer had foreseen that one day Schmidt might no longer be able to help for whatever reasons. If that happened, the Poles could count on no one but themselves. Without the keys, Marian Rejewski would be compelled to exercise his ingenuity to deal with new cryptographic challenges in the future. In other words, Langer wanted Marian and his colleagues to be challenged so that they would become self-sufficient. Marian Rejewski had overcome that challenge brilliantly: he broke Enigma ciphers without the daily keys held by Langer.Mechanical Decryption of the EnigmaAlthough Marian’s cataloguing method worked, it was too time-consuming and tedious. Since time was of the essence, Marian recognized the need for a faster method to find the rotor setting. This motivation led to the next breakthrough in the cryptanalysis of the Enigma.Marian designed an electromechanical contraption now referred to as the Bomba. The design was realized by Antoni Palluth - owner of the AVA radio company and a member of the Cipher Bureau.Each Bomba constituted an Enigma with a specific rotor arrangement. Since There were six arrangements of the rotors (3! = 6), the Poles built 6 Bombas. The machine operated on the principle formulated by Marian: exploited the doubly-enciphered indicator. According to Marian, it worked in the following manner:using group theory of permutations from mathematics, we were able to build up a catalogue of all possible keys. This machine will search the key code message for patterns then stop automatically as soon as the pattern is found in the stored catalogue. Once we have the key codes, the Enigma can then be primed to read the message.The bomba significantly reduced the amount of time taken to find the rotor setting to 2 hours. It was an ingenious and arguably unprecedented advance in codebreaking: the mechanization of decryption in response to the mechanization of encryption.In consideration of his accomplishment and service, Marian Rejewski was awarded the Silver Cross of Merit in 1936 and the Gold Cross of Merit in 1938.The Poles Hit Dead EndIn December 1938, the Germans made significant changes to the Enigma that made the cipher vastly more difficult to break for the Poles.One change was made on the increase in the number of swapping cables from 6 to 10. This greatly raised the number of ways a message could be enciphered (from 100,391,791,500 (6 cables) to 150,738,274,937,250 (10 cables))Another change was the instruction for Enigma operators to use a new ringstellung for every message. Prior to this, the German operators were either lazy or inexperienced and kept using the same and easy-to-guess ringstellung for many messages (Such as AAA, XYZ, or BER (Berlin) or even the first 3 letters of their girlfriend’s name LOL). These stupid mistakes was of great aid to the Poles because it allowed them to sometimes deduce correctly what the message keys were without having to find the characteristic sets. This advantage went out of the window starting in December 1938 and thereafter.The other change, far more damaging to the Poles, was the introduction of 2 new rotors, increasing the number of available rotors from 3 to 5. This meant that the number of possible rotor arrangements was 5x4x3 = 60 - a 10-fold increase. This posed two challenges to the Poles:They needed to determine the internal wiring of the 2 new motors.They would need 60 bombas for the 60 possible arrangements of the 5 rotors. The cost for all of those machines far exceeded the available budget of the Cipher Bureau at the time.Remarkably, the Poles managed to solve the first problem. Back in September 1939, despite the Wehrmacht High Command’s order to use a new ringstellung for every new message, the Sicherheitsdienst - one of the Third Reich’s numerous security agencies - continued to use the same ringstellung for every new message well after the 2 new rotors were introduced in December 1938. It was a fatal and stupid mistake that enabled Marian to deduce the wiring for the 2 new rotors.Despite this success, the other problems - building 60 bombas - remained unresolved. The Poles simply could not afford all 60 machines.The consequence? Starting since the early 1939, the Cipher Bureau was confronted with an intelligence blackout. Their success rate dropped drastically from 70% in the previous year to a mere 10%. Finally, the Germans had outpaced the Poles.The Polish cryptanalytic success had come to an end - much to the disappointment and apprehension of the Poles.Intelligence Sharing with the French and BritishIn desperation, the Poles decided to ask the French and British for help. They intended to disclose their breakthroughs on the Enigma with their allies in exchange for any material aid that would enable them to continue their work.This set the stage for a secret meeting in a forest near Warsaw on 25th-26th July 1939. Prominent representatives of British and French intelligence services were invited to the meeting. The British delegation consisted of Dilly Knox, Alastair Denniston, Wilfred Dunderdale. The French delegation consisted of Gustave Bertrand, Henri Braquenié.The French and British interacted with prominent members of the Cipher Bureau, including Gwido Langer, Maksymilian Ciężki, Marian Rejewski, Henryk Zygalski, and Jerzy Rozycki.The British and French were excited. They were keen to see what the Poles had to offer.Langer set the meeting in motion.Langer: “So we are all in agreement so far as the sharing of information is concerned. Good. Then, gentlemen, I am delighted to inform you that we at this bureau have enjoyed considerable success in deciphering messages sent by the Germans by virtue of the Enigma machine. We have prepared certain information which we can make available to your departments if we can be assured of your assistance.”Langer paused and observed the reaction of the British and French.Dilly Knox was incredulous: “I don’t believe it! It is impossible to decipher messages sent with the Enigma machine.”Langer gauged the atmosphere and asked: “Am I to gather from your reactions that neither of your departments have had any success in decoding the Enigma?”“That’s correct. We have had our top minds working on this for years without success.” - Knox responded in a tone that smacked of embarrassment.Captain Bertrand: “Yes, my department has not had any success with this code and has considered it unbreakable.”Langer was disappointed:“Very well, gentlemen. It would appear that this meeting, which was specifically convened for the purpose of sharing information, falls short of my expectations. If my understanding is correct, you have no intelligence that can be of use to my department. Which leaves my bureau in the position of simply giving your departments top-secret information in good faith. Forgive me, gentlemen. I have to consider the implications of that.”Langer left the room to confer with his colleagues. He expressed his disappointment openly:We had expected that some intelligence could be provided to ourselves. You must understand — I am concerned about the security risk which extended knowledge of our position could present. We have successfully managed to maintain the extent of our advancement on decoding the Enigma securely within our unit. I do not need to emphasise to anyone present the importance of maintaining the utmost secrecy with this information.This is an unmitigated disaster... The risk to our organisation and to Poland is unquantifiable if it becomes known we can decipher the messages from Germany. Giving them information in return for nothing is an enormous risk with no advantage to ourselves.Jerzy responded:“If only it were that simple. We have no choice. We must share the information with the Allies. We need sixty Bomba machines and sixty of Zygalski’s sheets to enable us to continue to decode the messages rapidly. We do not have the resources to construct the machines required. The danger to Poland increases with each hour that passes. Never has our need to decode the German messages been more urgent. We must secure an undertaking from the Allies that they will supply equipment in return for our knowledge. It is vital we are able to continue our work.”Marian agreed with Jerzy:“The messages must be decoded speedily. It is vital we have more equipment. We are never going to have the funding necessary here for the production of the equipment needed. We cannot maintain our previous levels of codebreaking without either the machines and sheets, which the British can presumably provide. Not now the Germans have introduced the five rotor system.”Henryk added:“Now that Poland has a promise of assistance from Britain in the event of attack and the treaty with France, surely our providing assistance will assist Poland and demonstrate we are operating in good faith?”After soliciting their colleagues’s opinions, Langer telephoned General Waclaw Stachiewicz to obtain his his approval to share their knowledge on Enigma with the Allies.Meanwhile in the meeting room, the British and French were getting anxious.Dillwyn Knox said to himself: “Well, it looks like there isn’t going to be much information sharing. Do you really think they have been able to advance with breaking the code for the Enigma machine?”Alastair Denniston shook his head: “I don’t believe they have. We have the best minds working on this day and night with no progress.”Captain Braquenié: “They whisper it is the unbreakable code in my department.”Captain Bertrand: “I happen to know that they have exceptional mathematicians working on this. I am hoping they just may be able to surprise us, gentlemen.”Captain Braquenié: “Well let’s see, I have to confess my ignorance. I had thought Poland a land of peasants.”Dillwyn Knox added: “Well it will be interesting to see if they are going to trust us. Personally, I don’t think they will have much choice.”You could perceive a sense of snobbery and condescension in the conversation (land of peasants). The French and the British appeared to think that since the British and French could not break Enigma, then the uncultured and unsophisticated Poles could not do it. Little did they know, they were sorely mistaken.Then Langer returned, looking much more relaxed than when he left.“Good news, gentlemen. I have been authorised to let you witness our Bomba in operation. As I explained earlier, our cryptologists have been working day and night to reach this stage of development. In view of Germany’s aggressive behaviour and the recent treaties between our nations, we are delighted to share our information. Given that, at present, you are not able to disclose any advances to ourselves, we are insistent on a condition that you provide assistance in providing equipment to decypher the Enigma. I will explain in more detail as we progress. Gentlemen, please be seated. I think you will be pleasantly surprised by what you are about to witness.”The British and French representatives were incredulous but returned to their places at Langer’s suggestion. Marian began the demonstration by showing an intercepted coded message to everyone in the room.“This is a message which our radio interceptor team traced. It is passed immediately to our section and to our team here.” - said Langer.Marian, Jerzy and Henryk unveiled a machine - it was a Bomba. They proceeded to operate the machine to decipher the sample coded message.The guests watched quietly in suspense, and then started with shocked surprise as the Bomba started making lots of tickling noise.Marian: “It’s quite noisy. The machine is electrically powered and systematically works through the 17,576 possible different positions for the rotors. When it finds the right one it stops. It can take up two hours to work through all the possible permutations. That means, in a maximum of two hours, we will have the daily keys which were being used by the Germans on the day the message was sent. Once we have the daily keys in operation for a particular day, we can decode all the messages sent that day without further requirement of the Bomba. We can use the Enigma machine, which we have here.”.While waiting for the Bomba to find the key, Marian unveiled a replica of the military Enigma that he had designed (without having ever seen an actual machine).Dillwyn Knox was astonished. He asked: “How on earth did you discover all of this?”Marian replied: “I was fortunate to have some assistance. I was given some manuals and codes relating to the Enigma machine. I understand that I have you to thank” - Marian turned to Captain Bertrand (recall that he got the document from Hans Thilo Schmidt)Dillwyn Knox: “Yes. I myself worked extensively on the documentation you (Bertrand) provided, but I came to the conclusion that it was impossible to decipher the Enigma with that information alone. Although I made some progress developing a formula to ascertain the daily setting of the keys, eventually I concluded it was impossible to ascertain the wiring of the rotors.”Marian stood proudly before the Bomba. “I reconstructed the internal wiring of the military Enigma.”“What? You discovered the internal wirings for the drum. How?” - Dillwyn Knox jumped to his feet.(Note: The drum Dilly Knox was referring to was the static drum between the plugboard and the rightmost rotor.)Marian laughed. ‘You won’t like this. Initially, I worked through a number of methods which I considered probable. None of those worked. So I guessed.Knox asked in disbelief: “How could you guess?”Marian crossed his arms, enjoying the attention riveted upon him. ‘It just came to me one day as I worked through all the possible complex combinations. I stopped. I thought “what would my German teacher at school have done?” I remembered the German love of order. Then it was simple. I knew without any shadow of a doubt that I had searched too hard for a solution. The keyboard of the military version displayed the letters in alphabetical order, the letters round the rims of the rotors were ordered in alphabetical order. What could be more simple?”There was a resounding thump as Dillwyn Knox’s fist pounded down on the table. “I can’t believe it. How simple. Why didn’t I think of that?”At this point, the Bomba stopped making noise. It had found the ringstellung for the sample coded message. Jerzy set the rotors to the resulting ringstellung and typed in the coded message which yielded the plaintext message:“Section 4 U Boats head to Gdansk 1400 hours 19th”At this point, the astonishment felt by the British and the French reached its climax. Dilly Knox stood up to give a round of applause. The other attendees followed suit.“Absolutely first rate work!” - said Knox.The British and French were fairly embarrassed for underestimating the Poles. Whatever doubts they had with regards to the success and ability of the Poles vanished following the demonstration. The British who had given up on Enigma now realized that the supposedly unbreakable Enigma could be broken. The Polish achievements revived their hope in the cryptanalytic battle with the German ciphers in the imminent war.In September 1939, Nazi Germany invaded Poland. The Cipher Bureau’s systematic codebreaking effort had come to an end.SummaryThe Poles indeed had broken the Enigma cipher for many years before the British did. It was an achievement that attested to the intelligence, talent and ingenuity of the Polish codebreakers, especially Marian Rejewski who single-handedly came up with the mathematical theory to find the permutations that produced the indicator, who discovered the characteristic sets and the crucial relationship between cycle structures and the rotor setting, and who devised the method to find that rotor setting. This achievement became even more remarkable in light of the fact that British and French were convinced that the Enigma was invincible. Although this success would be highly unlikely without the treachery of Hans Thilo-Schmidt who supplied the materials needed to deduced the wirings of the rotors, and without luck (the guessing of the mapping between the static drum and the keyboard), those facts did not diminish the worth of Marian’s accomplishment.Much respect to the achievements of Polish codebreakers.I hope the readers find this a compelling read. (I am delighted to complete this answer in fulfillment of a longstanding promise to a friend :D)Reference(s)1/ The Code Book: The Science of Secrecy from Ancient Egypt to Quantum Cryptography - Simon Singh.2/ X, Y & Z: The Real Story of How Enigma Was Broken - Dermon Turing, Arkady Rzegocki.3/ The Cypher Bureau - Eilidh McGinness

POINTS TO CONSIDER IN NEGOTIATING JOINT VENTURE AGREEMENTS56. Since the objectives sought by international collaboration in commercial fisheries operations as well as the conditions under which negotiations are conducted vary substantially from case to case, it is impossible to lay down hard and fast rules for joint venture agreements. Nevertheless, there is a need to discuss, particularly for the benefit of developing countries which have had little experience in this field so far, points that should be considered in entering and conducting joint venture negotiations to ensure that agreements will be of mutual benefit to the partners and to lessen the danger of conflicts in project implementation. The Department of Fisheries of FAO is currently engaged in preparing a manuscript on criteria and guidelines for fishery joint ventures which aims at presenting a comprehensive exposition of the problems. For the purposes of this note, it will suffice to summarize some of the main considerations.The choice of a partner57. The choice of a partner is of crucial importance for the success of a joint venture. The problem of choosing the right partner is probably easier to solve for the partner in the capital-importing country, since many of the potential overseas partners are multinational enterprises with an internationally known history and reputation. Even if the overseas partner is relatively unknown, there are, in the major capital-exporting countries, numerous published business reference sources, not to speak of chambers of commerce, better business bureaus, and the like, which can be consulted to fill gaps in information.58. In searching out potential partners, it is very useful to examine what other things the potential partner (especially if it is a major corporation) does, beyond the specific area of possible collaboration. By looking at the entire range of the other side's activities, and assessing them against the entire range of one's own business, both sides can obtain a clearer understanding of the other, of their goals and operations. It helps either sharpen the basic mutuality of interests or bring to light potential areas of conflict.59. A growing number of international joint ventures in fisheries are constituted by more than two partners. The meshing of divergent interests becomes more complicated when several rather than two enterprises only are associated. The problem, however, may be solved by conferring the management responsibility on one of the parties. Distinct advantages can be gained, in individual instances, from a larger number of participants, for the following reasons: through the provision of specialized skills and services (fishery ventures with Japanese enterprises, for instance, often benefit from the participation of both widely experienced fishing companies and trading firms), the spreading of the financial burdens and business risks connected with operating the overseas venture among additional partners, and the strengthening - by the aggregation of larger resources -of the competitive position of the joint venture versus other enterprises.The negotiation of a basic understanding60. The parties contemplating a joint venture should try to come to a preliminary understanding. A “memorandum of understanding” might cover, in general terms, nature, scope, and location of activities to be carried out, duration of the partnership, financing, facilities to be utilized and management. Initially, each partner may envisage a range of activities wider than what is ultimately agreed. The foreign company, for instance, may wait to take advantage of the off-season in the fishery which is the object of the venture, to engage in other fishing or, in a tuna baitboat fishery, may want to use its boats to fish for bait to have control over bait supplies. The host government, on the other hand, may be unwilling to permit a branching out into other fisheries, since this might jeopardize the livelihood of fishermen engaged in these fisheries.61. Host governments may want to promote joint ventures with a view toward fully integrated operations. For the development of specialized operations, e.g., involving development of a new fishery, they might prefer to engage consultant services rather than form a special partnership. The foreign company, however, may not want to agree on the establishment of local facilities which compete for supplies with facilities it already owns elsewhere or because it feels that local handling and processing would cancel out economic advantages it expects from participation in the venture.62. The selection of areas and locations for the establishment of facilities and operations is one of the important facets of preliminary survey work. Modern management tends to evaluate the benefits and drawbacks of various sites in broad terms, using manpower, government and finance, “livability” (amenities for foreign staff, climate, etc.), and communications and facilities considerations as yardsticks. Some international companies have gone as far as to establish a weighted value index for these factors which they use for decision-making.63. Where nature or government limits the areas in which joint ventures are allowed to operate, the location of facilities may be more or less predetermined. There may be, for instance, only one or two sites suitable for harbour use or construction. The stipulation in the joint venture contract of a concession area may be of benefit to the project as long as it is accompanied by certain privileges related, for instance, to exclusive operations. Where the area limitation impedes mobility, however, it may result in a net disadvantage. In one country where international joint fishery ventures have been tied to “concession areas”, national companies engaged in similar operations, are reported to enjoy greater freedom of action, since they have the possibility of shifting their fishing seasonally from one part of the country to another.64. Exclusive or monopoly privileges may relate to other aspects of joint venture operations besides geography, such as rights to engage in specific activities, allocation of materials, fiscal concessions, product marketing, product distribution areas, etc. There is no categorical answer on whether or not these privileges are necessary for successful operations, justified or objectionable on “moral grounds”. The classical objections to monopoly, that it leads to neglect of cost savings and to abuses of power, raises prices to the public, and prevents entry of potential - more efficient, more cost-conscious - competitors, do not always apply. To induce an enterprise to assume the risks associated with the development of a new fishery, the same protection may have to be offered as for other “infant industries”. As far as developing countries, in particular, are concerned, there is good ground for supporting the infant industry argument as long as net social benefits are deemed greater than those which could be attained by techno-economically feasible alternative investments. Additional reasons for justifying privileges on the fishing side are connected with the common property character of marine fishery resources. Limitation of entry is today more or less generally acknowledged as one of the essential measures for rational resources management. In the absence of restrictions, vessel productivity may sink to a point where the enterprise cannot break even. This may be the main reason why potential foreign partners for joint venture operations demand protection from “excessive competition”.65. There is a difference between placing a ceiling on the total number of ventures authorized and the granting of monopoly status. Clauses on fishing privileges in joint venture agreements, it is suggested, should take into account: (a) the degree of incentive required for a pioneer venture; (b) if sufficient knowledge of stock is available, the potential for economic expansion of the fishing effort, and (c) the time period for which inducements or protection need to be provided. If the duration of the venture is likely to extend from the infant to the maturity stage of the fishery, the contract may stipulate a point of time at which the matter of exclusive privileges is to be reviewed. In general, to forestall potential conflicts, all privileges with respect to operational monopolies, areas, taxes, etc., should be spelled out, and duration as well as conditions under which they become invalid carefully specified. As far as fiscal incentives are concerned, these are usually set down in the host country's investment legislation. Nevertheless, it will be desirable - or necessary, if the conditions applicable to the venture depart in some way from statutory provisions - to detail them in the contract.66. In many joint ventures, the complementarity of interests between partners, which motivates the original decision to collaborate, is expected to be of temporary rather than permanent nature. With the passage of time, the host country partner is expected to acquire sufficient financial and skill resources to assume full responsibility for the enterprise, while the foreign partner will have achieved his business objective and will be ready to withdraw. As a rule, therefore, the joint venture contract stipulates the number of years for which the partners agree to engage and do business, sometimes adding a proviso that the contract, subject to host government approval, may be continued by mutual agreement of the partners. Often, a gradual withdrawal of the foreign partner is envisaged, with agreed dates for the transfer of parts of the equity, physical assets and management control until complete “naturalization” of the enterprise is achieved.67. Setting an appropriate term for the contract is not always an easy matter, since the partners most probably have different time spans in mind in appraising requirements for satisfying their objectives. The local partner may tend to be optimistic with respect to the time it will take him to be able to stand on his own feet. Local pressure for a term that appears too short for accomplishing what the joint venture has set out to attain may make the foreign partner want to limit his commitment, insofar as it may discourage him from helping in the establishment of permanent shore facilities, or -in the extreme case - make him decide to discontinue negotiations. Setting a period that may be excessively long, on the other hand, also has its drawbacks, unless provisions for periodic review of the terms of the contract are incorporated. Without such provisions, the incentive to achieve the goals within the established terms of the business plan might be lessened.68. Difficulties may be avoided if the other provisions of the contract (relating to capitalization, material inputs, manpower, etc.) are specific on the time periods within, which “naturalization” (transfer of ownership or responsibilities) is to take place. Sometimes, the term of the joint venture agreement is more or less “predetermined” by the duration of privileges or concessions accorded to the venture by the government, since continuation of the business without them may be unprofitable. Difficulties in reaching agreement on the nature of operations to be carried out, on financing, management, etc., are at times so insurmountable that negotiations have to be cut off before a memorandum of understanding is signed.Drafting the terms of the contract69. Where a basic understanding has been reached, the document is usually subject to approval by higher authority (top management of the foreign company and the government of the host country)before a detailed contract for the joint venture is drawn up. Success in matching the interests of the partners in the writing of the contract depends very much on the thoroughness of preparatory work. Often, however, the extent to which the contract meets the individual partner's aims is a reflection of relative bargaining power. Bargaining is a natural feature of any business transaction involving the transfer of goods and services (know-how and skills, fishing concessions, etc.) for which no fixed prices are established. What both sides must not forget in the bargaining process is that there are limits beyond which demands for concessions become unreasonable, when the other party will be inclined - or even forced - to break off negotiations. The art of business negotiating really is not much more than a guessing game concerning these limits. Beyond that, what is required for bargaining is flexibility, a willingness to modify one's position when terms appear clearly unacceptable to the other party, and good legal assistance to eliminate possibilities of ambiguous interpretation once agreement has been reached.70. Some experts believe that the very best legal advice is the cheapest. According to another view, attempts to draw up fully comprehensive legal agreements between partners in different countries can lead to endless delays and frustrations. In the end, mutual trust and willingness to take some risks are needed, and no amount of legal activity will alter this.71. The two statements are not necessarily contradictory. The degree to which reliance can be placed on “mutual trust” depends on success in the choice of a partner. In some instances, the field of candidates (fulfilling qualifications with respect to capital, know-how or other support they can provide) from whom to choose may be quite limited. On the other hand, the number of experienced international law firms available for negotiating a joint venture may not be large or the cost of employing them may be out of proportion to the marginal benefits that might be gained from concluding a somewhat more favourable contract. As a general rule, the importance of clear and precise phraseology and the precision of time elements as well as of spelling out, in unambiguous terms, all special conditions, exceptions relevant for the interpretation of the contract clauses, cannot be enough emphasized. Although not always unavoidable, certain phrases, e.g. “as soon as practicable”, “will depend on results”, “at the market price” (as long as no explanation is given on how this price is to be determined), etc., are likely to be interpreted differently by the partners and constitute, in some ways, “built-in” germs of conflict.Contract clauses on material inputs72. Joint fisheries ventures have experienced problems, or have failed in some instances, because the contracts did not define in sufficiently precise terms the type of equipment to be employed in the conduct of operations, the time schedule for its creation, provisions for the procurement of spare parts, etc. In some instances, contracts have failed to spell out arrangements for ensuring that equipment acquired by the joint venture corresponds to what has been stipulated.73. Local partners and host governments often insist on playing a role in drawing up specifications for the physical inputs of the joint venture, as foreign partners sometimes have been blamed for providing equipment of the wrong type or of unsatisfactory quality. Where local staff with the requisite skills for the technical and financial appraisal of needs is available, this participation would seem not only appropriate but desirable; where not, the economic health of the venture may be in jeopardy from the start if a local partner's unrealistic ideas on serviceability and costs were to prevail. Lack of expertise can be made up by reliance on consultant services, which might be procured, among other means, by requesting technical assistance by international agencies. While such agencies might not be in a position to arbitrate in cases where the suitability of equipment is under dispute, they should be able, at least, to provide expert counsel.74. Complaints by local interests with regard to facilities and machinery provided by overseas partners quite frequently relate to “age” or “suitability for employment in the local setting” (including the possibility of it being properly operated and maintained by local staff). Sometimes the motivation of foreign partners in providing “secondhand” equipment - or, in other cases, providing overly expensive or unnecessarily advanced or difficult-to-operate equipment - is questioned, and they are suspected of wanting to profit at the expense of local partners. There is no standard answer to the question whether, for instance, “secondhand” or “modern” fishing vessels or fish-processing equipment should be employed, since a feasibility study is required to decide what is better suited to achieve the economic and social objectives of the venture. If the products are to be competitive in the export market, and if, in the processes to be employed, opportunities for substitution of labour for material inputs are limited, circumstances may dictate the use of technically up-to-date facilities and methods. Secondhand equipment, on the other hand, often can be made available much more speedily and is likely to be much less costly. Under some circumstances, furthermore, acquisition of new equipment might be precluded by the impossibility of obtaining a foreign exchange allocation or by onerous customs duties.75. Under normal circumstances, if the value of the assets to be contributed to the joint venture is realistically determined, and if the foreign company is sure that it can maintain a significant equity interest and stable returns from its investment over a longer period of time, there should be no problem about the equipment. There is a need to agree on provisions ensuring that the assets contributed to the joint venture are valued in accordance with commonly accepted accounting standards. It also seems desirable to have the foreign partner acquire more than a token part of joint venture shares entitled to dividends to make sure he has a genuine interest in increasing profits.76. Procedures for establishing the value of assets, have to take into account the fashion in which they are being created. Where facilities are being constructed, the valuation procedure should include indications on how adherence to technical specifications and costs are to be checked. For already created assets that are to be transferred to the venture, the services of professional inspection and appraisal companies might be engaged. Special care has to be taken in capitalizing contributions of intangible assets, such as goodwill, because of substantial pre-emptive claims on future profits that can be established this way by the partner contributing such assets. Where assets are placed at the disposition of the joint venture on a loan basis or where, for example, fishing vessels are chartered for a given period, excessive charges against income might arise, through inflation of the loan value represented by the assets, stipulation of interest rates that are higher than those that would normally be applicable on loans of this type, and the charging of charter fees above prevailing levels. Unless commonly acknowledged standards for fixing the value of the assets or charges exist (e.g. published information on equipment prices, charter fees, etc.), advice may have to be obtained from experts or, alternatively, the partners may want to agree on the selection of a professional appraisal service.77. Attention must also be paid to the time factor in drafting the equipment clauses of the agreement. Many contracts foresee a phased installation of facilities, with the original fishing vessel input, for example, to be increased by specified numbers of additional vessels after a certain number of years until the fleet reaches the size agreed in the investment plan. Achievement of specified results by a given point of time or fulfilment of certain conditions may be prerequisites for the completion of the investment plan, e.g., where the contract stipulates that construction of shore facilities is predicated on the results of a fishing survey that extends for an agreed time period. If the initial fishing operations are carried out with chartered vessels, the contract may indicate a time schedule for replacing them with vessels to be contributed by the foreign partner or with vessels bought with the earnings of the venture. Time schedules may be agreed also for the withdrawal of motherships and their substitution with shore facilities.78. Specific indications of time are desirable with respect to commencement of operations or utilization of the facilities and equipment of the joint venture and the dates of transfer of ownership if a venture is to be gradually “naturalized”. Some contracts provide for penalties if facilities to be contributed by one of the partners are not put into operation in accordance with the agreed time schedule, in an attempt to forestall delays in delivery detrimental to the achievement of business objectives. Additional contract clauses may detail conditions applying to the expansion of facilities created on formation of the joint venture. While some agreements may say no more on that score than that the venture is entitled to expand its physical plant to a certain size, other agreements may actually obligate the foreign partner to increase, for instance, his fishing fleet investment if and when the catch per vessel reaches a certain level. This is to prevent a venture with exclusive fishing rights from not taking full advantage of opportunities to exploit an, as yet, underfished resource.79. Some agreements place restrictions on the source of supply of assets to be originally contributed to, or in the course of operations to be acquired by, the joint venture. Host countries often have serious misgivings about contracts which obligate the venture to acquire physical inputs from one exclusive source, usually one owned or controlled by the foreign partner. If the transfer prices are high in relation to generally prevailing prices, and if the supplier's stake in joint venture profits is comparatively small, they tend to suspect the foreign company of being interested mainly in selling equipment rather than in collaborating in development activities. In a similar fashion, foreign companies may object to clauses obligating the venture to rely on local sources of supply, e.g., local shipbuilders, if there is substantial danger that the venture might not be able to absorb the additional burdens of high cost local operations and unreliable delivery.80. Sometimes equipment provisions of joint venture contracts include restrictive clauses on utilization. Host governments, for instance, may want to make sure that certain objectives of development policy will not be neglected, by having the partners agree that a part of the fleet that is to be operated will be engaged exclusively in fishing for the home market or that a part of the landings be sold domestically. In some instances, they may make the approval of export operations, with prospects of high profits, conditional on acceptance of this clause.81. For joint ventures that are heavily dependent on foreign-supplied equipment, provisions for the supply of spare parts and foreign assistance in maintenance are essential. Contract clauses should be as specific on this point as for the equipment itself, detailing type, quality, size of inventory, nature and location of storage parts as well as staff availability for maintenance operations.82. Whenever one of the partners has a financial interest in material considered as important items of running costs (e.g. fuel, freight, ice), the contract should prescribe a procedure for determining quantitative needs and prices, to make sure the supplier cannot bilk the joint venture through overstocking it or through charging excessively high prices.83. Another subject that should be covered is the role of government in ownership, procurement, control, fiscal operations, etc. If the government has a direct or indirect (through provision of loan funds) interest in the assets, it may want to take part in the choice of equipment or, as a minimum, in the verification of its technical suitability for the operations contemplated.84. Where new facilities are being constructed for the the government may reserve its rights to insist on changes in specifications and to carry out inspections during the building period, and may want to make the granting of credits and other facilities for the venture conditional on certification by inspectors that the standards have been met.85. The government can be expected to have a role in insurance and guarantee schemes affecting assets owned by - or Bade available through credit to - the joint venture. The agreement should identify the assets protected in this manner and describe the character, magnitude, amounts insured or guaranteed, duration, cost (insurance premiums) and collateral or surety arrangements associated with the extension of such facilities. Wherever applicable, the contract should be explicit also on special facilities offered by the government in respect to importation of equipment and materials required by the venture, indicating their character, quantities to which applicable, concessionary tariffs or exemptions, and duration of privileges. Details should be provided also in the contract, where government controls exist, on allocations of foreign exchange or of scarce materials to the joint venture.Contract provisions relating to manpower86. Joint venture contract provisions on manpower have to detail agreed plans for recruitment, utilization, training and, in due time, “naturalization” of the work force. These plans will be influenced by provisions in investment codes relating to the staff of joint ventures and by labour legislation as well as, in general, institutional factors such as trade union policies in the host countries.87. Estimates of manpower to be recruited or assigned from the existing work force of the partners should be as specific as possible in regard to occupational and skill levels and numbers required. Time schedules for recruitment should take into account the desirability of avoiding operational bottlenecks due to non-availability of staff and, on the other hand, possible idleness because preparations for the launching of some operations have not been completed. In addition, they should pay regard to the availability of essential amenities for the staff, especially housing facilities and transportation to the work place, and to educational, recreational, and shopping facilities. Where such facilities are to be specifically created for the joint venture, the contract should provide the relevant detail.88. Foreign and local partners may hold divergent views on manpower recruitment, especially where one or the other might stand to gain from assigning from his work force a larger number of staff or staff of higher rank or salary levels. A partner will not engage in a “dumping” operation and will not burden operations with excessive labour costs if he has confidence in deriving profits from the venture over the long term. Sometimes the pressures to hire staff (especially at high levels of responsibility or salary), whose employment cannot be justified on operational grounds, originate with the host government. While the partners may, for political reasons, find it impossible to resist such pressures, host governments must realize that the extra burdens they are imposing on the venture will run counter to any efforts of theirs to promote viable joint venture arrangements. Political influence on staffing, and government intervention in labour-management relations in general, are often cited among the major obstacles to expansion of joint venture operations in developing countries.89. Statutory provisions may stipulate that local employees must constitute a specified minimum percentage of the work force or that the employment of expatriates - sometimes classified by occupational and skill level - must be limited to certain percentages, that local staff must, for equal work, receive equal pay, and that the entire work force must be “naturalized” within given periods of time, etc. While such limitations are generally justified, among other reasons, on grounds of a need to increase jobs for local staff or to reduce the drain on foreign exchange paid to expatriates, to avoid antagonism between co - workers as a result of unequal treatment, to accelerate transfer to local control, etc., they may lead to a loss of flexibility in operations serious enough to deter some foreign companies from entering into joint venture agreements. Such statutory provisions may disregard technical requirements, while “equal pay” provisions may make it difficult, if not impossible, to induce qualified expatriate staff to accept employment if local scales are to be adopted. Again, if foreign scales are to prevail, it may make the entire venture uneconomic or create an elite of local employees who are too highly compensated in relation to others performing similar work in other local enterprises.90. Provisions reflecting either government or labour organization policies, which may be “unpalatable”, in some cases, to foreign partners, are restrictions on hours of work and on the dismissal of staff. Countries which have had no experience in fishing operations on an industrial scale should recognize that the peculiar nature of these operations precludes the adoption of fixed daily working hours such as followed in land-based enterprises. Curbs on - or extremely cumbersome administrative procedures connected with - the dismissal of workers also will involve sacrifices of efficiency which a joint venture cannot afford to make.91. Quite often, friction between local and expatriate employees arises from other causes such as differences in food habits, standards of cleanliness, attitudes toward work, and different aspirations for economic improvement. These are likely to become major problems, particularly where people of various nationalities and of radically different backgrounds must work in constant close contact as, for example, on a fishing boat. Such conflicts cannot be warded off by contractual provisions. Yet, the planners of joint ventures would be unwise if they failed to consider ways and means of preventing clashes, possibly by instituting internal arrangements on board ship or in plants, by staggering shore leaves for foreign crews, and by sponsorship of activities that will encourage people of different backgrounds to get to know each other and create a team spirit.92. Qualms about the suitability or efficiency of local labour may induce expatriate management to press for the institution of capital-intensive techniques. The latter in turn may be so complicated that opportunities for “naturalization” of the work force become more remote than they were originally.93. Many multinational companies welcome a local organization that can provide staff with a knowledge of local custom and business practices. Staff redundancy problems, among others, can be dealt with more easily, they feel, than in the case of expatriate staff that may have to be reabsorbed in the parent company after repatriation. Where advisable, and where acceptable to both partners, the expert knowledge the expatriate staff is to contribute can be made available by other means. Some joint fishery ventures, for instance, with French interests, include separate technical agreements, under which overseas crew members are assigned to the ventures. In these cases, special arrangements may have to be made to continue the crews' social security protection, especially for French nationals, because of the particular character of the French system. In general, social security provisions and other conditions applying to recruitment, wages, working conditions, separation, etc. of labour, are of such importance for the running of joint ventures, and often are so complicated, that they merit detailing in a subsidiary agreement or agreements where it is necessary to differentiate between conditions applying to local and to expatriate staff or between different categories of employees.94. Subsidiary agreements covering the employment of expatriate staff should detail, where applicable, the privileges and immunities granted under the host country legislation, home leave entitlements, transfer of funds and personal possessions between home and duty station, arrangements for housing, medical services, schooling facilities, etc., in order to provide a complete picture of working conditions, for the benefit of the staff, and, at the same time, to indicate the limits of financial and other responsibilities of the employer.95. The subject of training has an essential place in any discussion of manpower problems. For developing countries seeking to expand their fishery industries, training opportunities for local staff are a major objective. To accomplish their purpose, the contract provisions on training should be specific on the types of training to be carried out in the joint venture operations and on the additional training facilities available locally, the number of employees (by category and skill level) to be trained, length and content of training courses, allocation of the cost of training, and responsibilities to be assumed by employees who have successfully completed their training courses. Many host governments will be prepared to lend support to training programmes by making government facilities available on a cost-free basis, by providing subsistence for trainees, and in other ways.96. The joint venture's aim is to provide the best and most practical training at the lowest cost. On-the-job training on board ship or in processing plants is usually less expensive and produces faster results than any other form, especially for staff at levels of skill not requiring much academic instruction. Foreign companies, however, often complain that the training of unskilled cadres on the job has an adverse effect on the efficiency of, and consequently economic returns from, commercial operations. Even where they have agreed to provide on-the-job training, they often find ways and means of evading their obligations. Since the cost of providing special facilities, such as training vessels, is generally too high to be considered in a commercial venture, the partners should agree on some form of on-the-job training. The developing country will do well, in this connection, to insist on specifying in the contract the arrangements for keeping a check on the fulfilment of the obligations.Decisions on management control97. Both host countries and multinational companies tend to overemphasize the importance of ownership in relation to management control. A minority partner has many opportunities for frustrating the policies pursued by the majority partner if intent on so doing. If at all possible, it is better to have both partners participating in management. While the type of joint venture involved, the availability of management talents, and the size of individual capital commitments largely determine whether or not this is feasible, the sharing of management responsibilities, and the “becoming acquainted with each other's problems” that this entails, enhances the likelihood of the overall common interest being served more adequately.98. To have local executives who are owners and not just professional managers is often a definite advantage. “Involved” means that the local part owner looks at allaspects of the business as an entrepreneur, not merely as a functional speciality.99. The international company in turn must make sure that responsibility for joint ventures does not fall between chairs, and that they receive the kind of management support companies give their wholly owned subsidiaries.100. Multinational companies with experience in joint fishery ventures feel strongly about the need to obtain effective local management support. Some believe that a local partner should accept management responsibilities in proportion to his equity ratio, and complain about lack of a feeling of such responsibility by local partners who tend to insist on a majority shareholding, but should leave such responsibilities as locating sources of finance, sales promotion, and other entrepreneurial and management functions, to the overseas partner.101. Wherever a partner can claim superiority of experience or is providing equipment and technology unfamiliar to his colleagues, he will want to retain, at least for an initial period, essential management controls. This can be done by spelling out in the contract specific responsibilities assigned to him as, for example, for design and construction facilities (vessel and plant), technical management of (fishing and processing) operations, and selection of key personnel.102. Some degree of management control may be retained, even after a majority has been converted into a minority interest, by amending the bylaws of the joint venture to give the minority holder certain rights, e.g., the right to name the managing director. Other techniques applied to help the minority holder keep an influence on management decisions, include a stipulation on the bylaws themselves, viz that they cannot be changed without a unanimous vote of the board of directors; and the issuance of two kinds of stock, both with equal dividend entitlements but one being non-voting, or issuance of stock with multiple voting rights for the minority holder, while the majority holder receives shares with single voting rights (and, possibly, preferential dividend rights). The problem of loss of managerial control may not even arise, of course, where the majority ownership is dispersed among a large number of shareholders who have little influence at the board level.103. While there is a broad consensus that maximum advantage should be taken of a local partner's special knowledge of the local environment, opinions seem to be divided on the wisdom of fixing boundaries in all managerial decision-making. Some companies feel that the local partner should be charged with the responsibility for obtaining the fishing licence and all other necessary negotiations with the government and should also handle the hiring of local employees,all matters pertaining to their wages, status, etc., so as to avoid any occurrence of racial problems. Clearly, the local partner is best qualified to assume responsibility in these fields, although close political connections, which may be useful at the time of the negotiation of the agreement, may have drawbacks in the long run, especially in countries with a marked degree of political instability. In other instances, arrangements where the local partner looked after all problems involving local contracts, local labour, and local purchases of fishery requisites while the foreign manager looked after all operating and technical problems (e.g. the hiring of skippers, fitting-cut of vessels, product packaging, and shipping and sales operations) have not proved satisfactory, sometimes, because the local partner had no influence on sales operations.Provisions relating to business operations104. The contract should, as far as possible, outline particulars on how the joint venture intends to achieve its operational objectives and be specific also on relations with the host government, the foreign company, and non-affiliated private interests. Details of operational plans should be based on feasibility study information. Where such information is not yet available - as, for instance, with surveys for what are to be vertically integrated operations which have been limited so far only to the fishing sector - the contract might stipulate that plans for processing and distribution are to be incorporated at a later stage, upon completion of the necessary feasibility work. In similar fashion, expansion of operations in any one sector might be made contingent on a satisfactory assessment of results by stipulated control dates.105. In some instances, certain phases of operations, e.g. purchasing, marketing, certain payments to government, are covered in detail in special agreements or are otherwise fixed, and projections do not present any difficulties as long as a good base for estimating catch volume exists. Catch, of course, is always the most difficult variable to take into account, especially if the venture does not have exclusive exploitation rights in a given zone and for a given period.106. Sometimes governments find it necessary, for resources protection, to impose ceilings on the annual total catch the joint venture is permitted to take. The number of fishing vessels allowed, too, may be fixed, based on assuming their average catching capacity. Controls of this sort should be reviewed periodically so as to ensure that ceilings do not constitute, if too low, unwarranted limitations on profit-making opportunities or, if too high, do not provide adequate safeguards for the resource.107. In a contractual venture, the relations between the partners are usually more complicated than in an equity venture. As a consequence, specific responsibilities assumed by each partner have to be spelled out in great detail and substantial additional record-keeping may be involved to determine the share in benefits and in cost burdens of each partner.108. The equity joint venture contract also must contain clauses to ensure that transactions between the joint venture and the parent company of the foreign partner are strictly commercial. Transactions to be shunned are sales of services that may not be essential or excessive charges for them. In this class is the chartering of vessels on continued basis, although substitution by local vessels (with commensurate benefits to the host country economy outweighing eventual sacrifices in efficiency at the enterprise level) has become possible or the charging of charter fees which are significantly above world market levels. Other types of transaction are those where facilities owned by the joint venture are made available to the foreign company without - or without adequate - compensation. These situations, such as where ice, fuel, provisions, etc. are taken on locally by vessels belonging to the foreign company's home fleet, must be distinguished from those in which the joint venture or host country secures specific services (e.g. reports on fish prospecting by the foreign fleet) or, in general, benefits from the business the home fleet gives it (e.g. expenditures of the crews in the local ports).109. Prices charged to the foreign company on sales of products produced by the joint venture also need watching for unduly high discounts, although allowances should be made for transport, handling, and marketing services rendered by the foreign company as well as for volume business. Contractual commitments by the foreign company to purchase the entire production should be examined in the light of market conditions likely to prevail over the period covered by the agreement. Having an assured outlet for total output may not be preferable to having a choice of markets, especially in a period of rising demand and prices.110. Once an equity joint venture has acquired its separate identity as a business enterprise, its transactions with the host government should be characterized by the same arm's length relationship that should apply to its relations with the parent company of the foreign partner, as long as the joint venture is in direct local competition with other enterprises. (A company with exclusive rights, on the other hand, is from its very beginning in a privileged position and may have additional benefits conferred upon it as far as its transactions with government are concerned, that is, as long as such preferment is considered in the economic and social interest of the country). Just as, upon formation of the joint venture, the foreign partner is expected to compensate the host government, through his contribution of capital, skills and know-how, for privileges granted, the joint venture should normally be expected to pay at established prices for purchases from government stores and for special government services provided. Similarly, sales of products to the government should be made at prevailing market prices, with due regard to government services utilized in this connection and to volume transactions, as in the case of sales to the parent company of the foreign partner.111. One of the most important services government can - but, alas, does not always -render to promote the smooth conduct of business of joint ventures, viz. efficient administrative procedures, is provided without charge. In some developing countries, agreements concluded with central government authorities have at times failed to fulfil the promoters' expectations because of inadequate or complicated and time-consuming liaison and communications with local authorities which have immediate supervisory responsibilities where the operations are located. Reduction of red tape and improved coordination of action between government agencies is probably of greater importance for a fishery joint venture than for other business enterprises, since such a business is likely to be of concern to a larger number of administrative units.112. Contract provisions covering relations with other enterprises than the parent companies of the partners and the government relate, for the most part, to suppliers and customers and actual or potential competitors. Such contracts, thus, may specify whether or not, and if yes, under what conditions: (a) the venture is permitted to buy fish from non-affiliated vessels,(b) partners' parent companies and the local government have priority rights with respect to others in the acquisition of joint venture products, (c) fixed assets of the venture can be disposed of to others than the partners of the government, etc. Excessive or too tight restrictions may place management in a virtual straitjacket in decision-making and seriously cramp profit-making opportunities. Yet, frequently some types of limitations can be defended on sound business or political grounds. A policy of buying from non-affiliated vessels (and, conversely, neglect of affiliated vessels), to take advantage of price fluctuations, for instance, may alienate the crews of the latter because of the effect on earnings under the share system and cause serious labour difficulties. Many foreign companies consider the prospect of increasing their fish supplies as the primary incentive for entering a joint venture, and depriving them of a preferential status as buyers might lead to a loss of interest in the venture (this does not mean that parent companies should be permitted to pay less than prevailing market prices). Similarly, in the disposal of assets, as in that of equity, promoters of the joint venture may legitimately claim rights of “first refusal”, i.e., to be given the opportunity to buy or not before offers are made to other parties.113. Host governments tend to intervene in the relations between the joint venture and “third parties” either to protect the rights of competitors or of small-scale fisheries for which they feel a social responsibility. They try to protect the business of established local interests from interference by the operations of the joint venture and, where the venture has exclusive privileges limited in time, to protect fishery resources which at a future time may be exploited by nationals of the country. A government, for these purposes, may insist on the insertion of a clause in the contract obligating the venture to respect the rights and privileges of local fishermen and pledging it not to compete within the zone where the local fishermen exercise their profession, except if the national authorities find that limited participation of the joint venture is unlikely to harm the local fishery.114. In other instances, the joint venture may be persuaded by government insistence -or may actually spontaneously come to recognize the propaganda value of such action - to offer direct assistance to local fisheries by, for instance, supplementing its catches by purchase from local canoes or buying bait from the fishermen. Where government restricts bait fishing to local fishermen, the venture may actually find it in its own interest to give material and technical assistance to the bait fishery. In one such instance, a venture is providing nets and other equipment and is training volunteer fishermen to engage in bait fishing.

The conventional history of WWII in general, and the history of nuclear weapons in particular, is unduly influenced by a handful of books, reports, and statements produced mostly by major Allied figures at or shortly following the end of the conflict. The resulting mainstream or conventional narrative which appeared and coalesced over the first three to four decades following the war is still largely accepted, usually without question, by the majority of students and historians of the conflict. In this answer, I will demonstrate, with specific archival citations, personal statements of eyewitnesses and participants, and other evidence just how and why the established history is, at best, badly incomplete in some places, and flat wrong—if not deliberately lying—in others.The most influential figures in the received history of the end of WWII in Europe were Samuel Goudsmit, Boris Pash, and Leslie Groves. This triumvirate had ample support from both British and German military, scientific, and political personnel, and all were eager to see at least the parts of Germany that were occupied by the western Allies brought into the anti-communist, free world orbit as quickly and smoothly as possible. Although a complete discussion and enumeration of the statements and information conveyed by these men is not practical in this format, for now we will note that all three were major figures in the Anglo-American Manhattan Project, and all were also heavily involved in ALSOS, the top secret nuclear intelligence mission which followed hot on the heels of the Allied invasion of western Europe in 1944.https://digitalcollections.hoover.org/internal/media/dispatcher/267836/full — Link goes to the full text of the “Confidential” final report of ALSOS mission leader Colonel Boris Pash, who states that one of “the outstanding results achieved” was “…an intelligence report submitted to Gen. Groves by Dr. Goudsmit, the Scientific Chief, as a result of which Gen. Groves was in a position to inform the War Department and the British Government that the Germans were not ready to employ atomic power in the European Campaign.”Register of the Boris T. Pash papersAlsos Mission Films Now Available For StreamingBoris T. Pash Papers, Reel 1 of 4: "Alsos Mission Films", Original Film Footage Shot During the ALSOS Atomic Intelligence Missions at the End of WWII in Europe. Courtesy of the Hoover Institution Website.Goudsmit laid out his written assessment for public consumption in his 1947 book, Alsos. Here he gave what he saw as the reasons for the apparent failure of the Nazi nuclear enterprise. The piece linked below summarizes:“Goudsmit concluded that the failure of the German atomic bomb project was attributable to a number of factors, including bureaucracy, Allied bombing campaigns, the persecution of Jewish scientists, and Werner Karl Heisenberg's failed leadership.”Samuel GoudsmitHeisenberg was based at the Kaiser Wilhelm Institute both before and during the war years and had been the lead scientist-administrator of the Uranverein or “uranium club”, which was probably the single most prominent—but definitely not the only—group of civilian nuclear scientists in the Third Reich. (Nazi military officialdom, however, seems to have periodically taken administrative control over the KWI at at least two points during the war years. Thus management of the Institute wobbled back and forth from civilian to military and back again at various times.) Immediately after the war, he was taken to Farm Hall, an estate in the English countryside, and kept under house arrest for six months. With him were a cross section of some of the best German scientific minds of that era. The surreptitious tape recordings made of some of the conversations between these men have long been cited as proof positive that no significant progress towards operational nuclear weapons was made by the Germans in WWII.Upon closer inspection, there is much reason to question this version of events, and to reject the conclusions of most of its proponents. First and foremost is the certainty that the German scientists knew their British hosts were eavesdropping.http://germanhistorydocs.ghi-dc.org/pdf/eng/English101.pdf — Link goes to “Volume 7. Nazi Germany, 1933-1945 Transcript of Surreptitiously Taped Conversations among German Nuclear Physicists at Farm Hall (August 6-7, 1945)” on the German History in Documents and Images website.Operation EPSILON (detention of German nuclear scientists): transcript of Farm Hall tapesThis is the First Page of an Original Top Secret Report Concerning the German Scientists Interned at the English Estate of Farm Hall, Just After the End of WWII in Europe. Notice the Conversation Between Kurt Diebner and Werner Heisenberg in Which Diebner Suspects the Presence of Hidden Microphones.Second, only three of the great minds at Farm Hall were really among the most crucial in the German nuclear effort. These were the loyal Army scientist, Kurt Diebner, Walter Gerlach, who was the head of all theoretical physics in the Third Reich, and the physical chemist, Paul Harteck. None of these men were particularly forthcoming during their time in captivity. Diebner and Gerlach, in particular, were tight-lipped most of the time, with Gerlach further reduced by what appears to have been a bout of depression. Among the few discernible discussions between these known military scientists were Diebner’s mention of “photo fission” and Gerlach’s brief comment regarding Neptunium, a transuranic artificial element and known fissile material. Neither of these is consistent with the relatively primitive (or at least inferior to the Allies) understanding of nuclear physics that the conventional history maintains was typical of these Germans. Nor are the contents of Gerlach’s wartime personal notebooks which are today found in the Deutsches Museum Archive in Munich, Germany.Dr. Todd H. Rider, formerly a senior staff scientist at MIT, conducted a years long personal investigation of WWII German nuclear science, during which he encountered the documents mentioned immediately above. In his extraordinary, 4,000 page magnum opus, Forgotten Creators, Rider comments that:“Walther Gerlach kept a series of small notebooks for scientific notes to himself. Since these notebooks served simply as scientific reminders for Gerlach, they do not contain detailed explanations, as formal laboratory notebooks would. However, they also do not contain any random artistic doodles such as some people make during meetings. Everything in them appears to have had a specific scientific purpose for Gerlach. Notizbuch 1943/44 [Deutsches Museum Archive NL 080/270-66] is a small orange notebook covering the period 10 November 1943 to March 1944. On the final page, Gerlach drew an ellipsoid remarkably similar to Friedwardt Winterberg’s postwar diagram of a hydrogen bomb in Fig. D.107. On the same page, Gerlach also included nuclear reactions involving deuterium and sketches of converging shock waves [Karlsch 2005, pp. 205, 321, 333]. Notizbuch 1944 [Deutsches Museum Archive NL 080/270-67] is a small dark red notebook that apparently began in March 1944; it is not clear when the final entry was made, but that was likely sometime in 1944 or possibly early 1945. Entries in the notebook show that Gerlach had scientific discussions (although the notebook does not give the scientific details) with Kurt Diebner, Siegfried Flugge, Wilhelm Groth, Fritz Houtermans, and other scientists on nuclear topics, including specifically the use of lithium. After the war, Kurt Diebner wrote about bombs employing fusion reactions (pp. 3116–3119) and worked closely with the young Friedwardt Winterberg. Edward Teller apparently tried to recruit Siegfried Flugge to help develop the U.S. hydrogen bomb (p. 3477). Wilhelm Groth was reported to have been working on a megaton-level bomb during the war, which is consistent with the physics of hydrogen bombs but not fission bombs (p. 3169). Fritz Houtermans was the first scientist to propose and analyze the fusion reactions in stars (p. 1424). While these surviving notes from Gerlach are cryptic and certainly not conclusive, they do suggest the existence of a wartime program that was very active by March 1944 and that involved the use of deuterium, lithium, and both fusion and fission reactions in an ellipsoidal hydrogen bomb design highly similar to that in Fig. D.107. Any more detailed documents on such a program would have been either destroyed by the Germans at the end of the war or captured by Allied countries and still buried in their classified archives.”The reasons for Gerlach’s comparative silence while under house arrest at Farm Hall now become clear.There is more. At least two branches of US intelligence had received information regarding considerable progress towards both a bomb and a reactor, as well as an apparent German nuclear weapons test, some 9 months before Heisenberg and the others arrived at Farm Hall. The following primary source documents are held today by the US National Archives and Records Administration, (NARA), and in my opinion speak for themselves.Philip Morrison to Robert Furman. The German Reichspost and Nuclear Research. 24 April 1944. [NARA RG 77, Entry UD-22A, Box 170, Folder 32.60-1 GERMANY: Summary Reports (1944)]“We now have three independent pieces of evidence that the Reichspost is interested in neutron research or wishes us to think that:1) Several years ago M. von Ardenne thanked the Reichspost minister, a man named Ohnesorge, for supporting the entrance of von Ardenne’s laboratory into work in nuclear physics.2) In October 1943 (Naturwissenschaften, 31, p. 507) a man, otherwise unknown to us, named D. Lyons, published a mathematical letter on the slowing down of neutrons in homogeneous mixtures. The material of the letter is rather similar to much work done in the early days of this project and also in the published sources. Lyons rather ostentatiously signs his letter as coming from the Office for Special Physical Questions of the Research Division of the German Reichspost (Amt fur physikalische Sonderfragen der Forschungsanstalt der Deutschen Reichspost) located in Berlin-Tempelhof.3) The information from Swiss sources which you showed us this week mentioned that S. Flugge has left Hahn to go to work for the Reichspost.It will be clear to you that there is something rather odd in this affair of the Reichspost’s becoming interested in a field so very far from the radio and telephone research they have carried out in the past. It is equally strange that we learn about it in such a direct way as from Lyons’ note, but confirm it in the rather indirect way of (1) and (3) above. I would suggest that you formulate inquiries about the activity of the Reichspost in the Tempelhof laboratories to whoever will know most about that outfit.”“D. Lyons” was Detlof Lyons, who was a known researcher in the Reichspost-funded nuclear program. “Ohnesorge” was Wilhelm Ohnesorge, an ardent Nazi and member of Hitler’s inner circle who had studied physics in his youth. He was fond of using Reichspost revenues to fund research into various advanced technologies. “M. Von Ardenne” was Manfred von Ardenne, who was unquestionably one of the greatest German scientists of that era. Note that von Ardenne had first approached Goering and the Luftwaffe about funding an attempt to build nuclear weapons and was turned down. (David Irving's book The Virus House described this in 1967.) He and most of his top lieutenants in the German nuclear project that was hidden in the Reichspost bureaucracy went over to the Soviets en masse at war’s end and largely built the bomb for the USSR from there. ”S. Flugge” was Siegfried Flugge, then a brilliant young physicist who wrote at least two of the G Papers, primary source original reports produced by the German Army Weapons Bureau for its clandestine nuclear weapons project which were captured by ALSOS and would remain classified until 1971. Edward Teller reportedly asked for Flugge to be recruited for the postwar US hydrogen bomb program. Robert Furman would go on to become one of two lead investigators sent to Japan to determine the progress of the WWII Japanese atomic bomb effort, something which is likewise ignored or at best drastically downplayed by the conventional history. Philip Morrison was one of the best American scientists of WWII and was a key figure in the Manhattan Project. His work as an intelligence officer, presumably in concert with General Groves and Colonel John Lansdale (chief of counterintelligence in the “Manhattan Engineer District”) was news to me when this and other documents were brought to my attention quite recently by Dr. Rider.Revolutionary Innovation | RIDER Institute | Forgotten CreatorsForgotten Creators is an online reference book released in February 2020. It covers revolutionary scientific innovations during 1800-1945.https://riderinstitute.org/revolutionary-innovation/https://www.nonproliferation.org/wp-content/uploads/npr/72pavel.pdfThe German Inventor-Physicist Manfred von Ardenne Was the Director of a WWII Nuclear Weapons “Black Project” in Nazi Germany. He and His Lieutenant Scientists Were Instrumental in Building Atomic Bombs for the Soviet Union in the Late 1940s.Philip Morrison and Karl Cohen. 31 July 1944. Appraisal of Enemy Bomb Production. [NARA RG 77, Entry UD-22A, Box 168, Folder 203.11—Tech. Countermeasures + RW—1943–1944]APPRAISAL OF ENEMY BOMB PRODUCTIONSummary“Recent evidence essentially confirms our earlier general statements on enemy bomb production.The reports now at hand lead us to conclude:1. A German “Y” project has been underway since early 1943.2. A D2O pile is in operation, but we do not believe that this is on production level.3. It is implied that a separation method is operating at a production level, for it is surely improbable that the enemy will organize a utilization group without something to use. We include a time schedule, and a technical discuss of the probable means employed.Enemy production of devices can be as high as:1. 1 device every 3 months—on the assumption that 30 kg of material are required per device.2. 1 device every month—on the assumption that 10 kg of material are required per device.In either case the first completed device could be in enemy hands now.”The reference to a German “Y” project means an effort to build an electromagnetic uranium separation factory. “Y-12” was the designation the Americans gave to their own version in the Manhattan Project, at Oak Ridge, TN. A “D2O pile” means a nuclear reactor cooled by deuterium, aka “heavy water”, though this particular report states that the German pile was apparently a proof of concept structure or pilot plant and not a full scale production reactor. Contrast this with the conventional history that has come down to us in the present day from Goudsmit, Pash, Groves, and others which states that WWII German science was nowhere close to either a functional reactor or any kind of atomic bomb or nuclear weapon, and also that the destruction of the Vemork plant in Norway meant the end of German work with deuterium.Let’s continue.OSS London. 5 December 1944. Report T-2805-a. [NARA RG 77, Entry UD-22A, Box 171, Folder 32.7003-3 GERMANY: US Wartime Positive Int. (Nov. 44–June 45)] Original No. T-2805-a Report from Sweden OSS LONDON Distribution: Information Date : Not Given.Report Date : 13 November 1944 PARISDissemination Date : 5 December 1944Value : B-3Source : OSSGERMANY : ATOMIC PHYSICS Heavy Water Experimental Station. Heavy water experiments are being carried out at the Drager Werke, Lubeck, which is reported to be the largest gas factory in Germany. The plant’s experimental station is connected with the experimental station at Peenemunde.The OSS was the American Office of Strategic Services, essentially the forerunner of the modern CIA. Heavy water is a key ingredient in both certain kinds of reactors and also in boosted fission and hydrogen bombs. The conventional history says these heavy water experiments should have been impossible because the attacks on the Vemork plant in Norway destroyed nearly all of the heavy water produced in German-held territory to that point in the war. Peenemunde was the center of German ballistic missile development.The American Scientist Philip Morrison, Shown Here Later in Life, Worked to Develop the Plutonium Bomb for the Manhattan Project and Was Also Directly Involved in Analyzing Wartime Intelligence That Had Been Gathered by the Allies Concerning the German Nuclear Weapons Program. At War’s End He Personally Interviewed Yoshio Nishina, the Lead Scientist in the Japanese Army’s Atomic Bomb Project, at the Riken Institute North of Tokyo. His Report of That Meeting is Included in Robert K. Wilcox’s book, Japan’s Secret War.Philip Morrison to Joseph Volpe, 20 October 1944, Loose Ends [NARA RG 77, Entry UD-22A, Box 171, Folder 32.60-2 Germany: Summary Reports (1945–1946)]There are a number of things to be done by the Washington office which have not yet been done. 1. We need a final report on the installation at Watten. This is such an extraordinary enterprise that we must be sure that it was not designed for something in our field. 2. The questions for Mr. Baker should be answered. 3. The recent reports of Baltic explosions should be covered by Major Calvert as usual. 4. The de Boer matter is still open. Has Alsos contacted J. H. de Boer at Eindhoven? This should be done if it is still possible.Dr. Todd H. Rider comments:"Dr. Philip Morrison (U.S., 1915–2005), a Manhattan Project physicist, was stationed in the United States but specifically tasked with analyzing Allied intelligence data on the German nuclear program. Morrison’s publicly available documents indicate that up through 1945, he believed the German nuclear program was much more advanced and dangerous than better-known investigators such as Samuel Goudsmit and Boris Pash seemed to. Regarding the specific points in the memo above: 1. Even months after the Allied invasion of France, Morrison and other Allied officials were both awed (“extraordinary”) by the rocket-launching installation at Watten and worried that some of its features seemed to indicate it involved nuclear payloads for the rockets. 2. “Mr. Baker” was Niels Bohr, who was famously quite concerned about the progress of the wartime German nuclear program. 3. In October 1944, there were “recent reports of Baltic explosions” that were being investigated by the Manhattan Project as possible tests of a German atomic bomb. That information agrees well with the other sources in this section that reported the apparent test of an atomic bomb on the Baltic coast in October 1944. Morrison’s comment also makes it clear that Allied officials thought the German nuclear program could be sufficiently advanced to test an atomic bomb, and that U.S. Army Major Horace Calvert had a “usual” procedure for collecting and analyzing such data. Can the relevant Allied intelligence reports be located and declassified now? 4. Manhattan Project intelligence analysts were actively seeking information on the German nuclear program from the Dutch intelligence network, and Samuel Goudsmit was involved in at least some of those contacts, including with the physical chemist Dr. Jan Hendrik de Boer (Dutch, 1899–1971). See pp. 3412–3416.] 3192 APPENDIX D."Note that the mention of Goudsmit in this context means it is likely he was aware of the October 1944 German nuclear weapon test at Rugen Island on the Baltic Sea coast. The obvious contradiction between this event and the statements in his 1947 book, Alsos, is plainly evident.A.P.W.I.U. [Air Force Prisoner of War Interrogation Unit] (Ninth Air Force) 96/1945. 19 August 1945. Investigations, Research, Developments, and Practical Use of the German Atomic Bomb. [NARA RG 38, Entry 98C, Box 9, Folder TSC # 2601–2700; AFHRA B-5737 electronic version pp. 340–345]47. A man named ZINSSER, a Flak rocket expert, mentioned what he noticed one day:“In the beginning of Oct. 1944 I flew from Ludwigslust (south of Lubeck), about 12 to 15 km from an atomic bomb test station, when I noticed a strong, bright illumination of the whole atmosphere, lasting about 2 seconds. 48. The clearly visible pressure wave escaped the approaching and following cloud formed by the explosion. This wave had a diameter of about 1 km when it became visible and the color of the cloud changed frequently. It became dotted after a short period of darkness with all sorts of light spots, which were, in contrast to normal explosions, of a pale blue color. 49. After about 10 seconds the sharp outlines of the explosion cloud disappeared, then the cloud began to take on a lighter color against the sky covered with a gray overcast. The diameter of the still visible pressure wave was at least 9000 meters while remaining visible for at least 15 seconds. 50. Personal observations of the colors of the explosion cloud found an almost blue-violet shade. During this manifestation reddish-colored rims were to be seen, changing to a dirty-like shade in very rapid succession. 51. The combustion was lightly felt from my observation plane in the form of pulling and pushing. The appearance of atmospheric disturbance lasted about 10 seconds without noticeable climax. 52. About one hour later I started with an He 111 from the A/D [aerodrome] at Ludwigslust and flew in an easterly direction. Shortly after the start I passed through the almost complete overcast (between 3000 and 4000 meter altitude). A cloud shaped like a mushroom with turbulent, billowing sections (at about 7000 meter altitude) stood, without any seeming connections, over the spot where the explosion took place. Strong electrical disturbances and the impossibility to continue radio communication as by lightning, turned up. 53. Because of the P-38s operating in the area Wittenberg-Merseburg I had to turn to the north but observed a better visibility at the bottom of the cloud where the explosion occurred.”Zinsser’s statement, along with the 9th USAAF intelligence report which included that statement and which had previously been circulated among a number of military intelligence officers, was later upgraded to Top Secret status in October of 1945.Further corroboration for the October, 1944 German atomic bomb test was provided by the Italian military and aerospace journalist, Luigi Romersa. Beginning in his 1955 book, Le armi segrete di Hitler (Hitler’s Secret Weapons), and continuing in various articles throughout the rest of his life, Romersa told the same story, with varying amounts of detail, of his trip to Rugen Island to witness the German test as the personal envoy of the Italian fascist dictator, Benito Mussolini. In Romersa’s words:“Dr. Schaeffer, the Italian press representative at the German Ministry of Propaganda, arranged for my first meeting with Undersecretary Neumann [Werner Naumann], Goebbels’ right-hand man. On 6 October 1944, Schaeffer informed me at the hotel that Neumann would receive me at 2:00 p.m. at the Propaganda Ministerium, in his office. He gathered for a moment then scanned the words taken: “We have achieved the disintegration of the atom. We have the disintegrating bomb whose effects go beyond any human imagination...” At the end of his long monologue, Neumann came to talk about the “V 2,” “V 3,” and “V 4,” pointing out that the last two types, followed by three others, were radio-controlled and therefore infallible. I also got the promise of a visit to the underground factories and his interest, at Goebbels, to attend an experiment of bomb disintegration that was to take place in those days on an island in the Baltic.On 10 October 1944, I was warned to be ready to leave for the north. I left Berlin on the night of the 11th by car; two officers accompanied me, one of whom told me that on my return I would be received by Goebbels. I had spent most of the evening in the refuge of the Adlon Hotel. In my ears remained the voice of a loudspeaker, telling the Berliners during the bombing where the bombs had fallen, the number of raiders and where the fires had broken out. Many, even before leaving the refuge, knew that they would never find their home at the exit. We traveled for several hours in the damp darkness that stuck to the glass like a fog. It seemed that on the windows of the car instead of fog it dripped dark. Only at the end of the trip did I know that I was near Stralsund, in front of the island of Rugen, which we reached with a Navy motorboat. Rugen was an experimental center where the new German weapons were tested. Special units of assault troops protected the island and prevented access to it by anyone. To get to Rugen you needed a safe-conduct signed by the chief of staff of the Wehrmacht. We immediately went to an area full of trees where we found other officers and some technicians. Concrete shelters and small brick houses had been built in the woods. We entered an armored turret, half-open, through a metal door that was closed with every care. Inside there were four of us: the two officers who had accompanied me, another man dressed in a suit and me. I waited for noon with my heart in my throat. At noon, according to what the man in the suit had said, there would be the experiment of the “disintegration bomb.”The bomb was to explode on the ground, about two kilometers from our armored observatory. Time did not pass; the minutes were hours. It had started raining again and a dense fog was rising from the undergrowth. The ground in front of us was rotten and dark, the color of the monks’ habit. A telephone rang inside the bunker. They warned that the experiment had been brought forward to 11:45 a.m. There were therefore five minutes left. I was just in time to consult the clock that I heard a tremendous roar. The floor rocked under my feet and for a moment it seemed to me that the walls of the refuge were closing. In front of me I could only see smoke, a whitish, woolly smoke, boiling like the slime vomiting from a sewer. Other bursts of light followed by blinding flashes. The sky, dark and closed, was torn by very white flashes. I passed a hand on my face, I was sweating. No one opened their mouth. The roar just before was followed by a silence that gave the creeps. It was the man in the suit who spoke first. He was a colonel of the “Army Ordnance Office,” the body in charge of the preparation of the armaments. “What we will see today—he said—is of paramount importance. When we can drop our bomb on invading troops or on an enemy city, Anglo-Americans will be forced to meditate whether it is worth continuing the war or ending it reasonably. We’ve been studying for years. We have finally achieved our objective.” His words fell into silence. We all listened to him with our eyes.We left the bunker around 5:00 p.m., after some representatives had arrived dressed in a monstrous suit; on their heads they wore a helmet like that of a diving suit, only that it was floppy and had no screws. We also wore a strange shirt of rough, white fabric and trousers of the same fabric. We walked ahead of the soldiers. As we advanced, the earth appeared to us to be upset, ploughed, torn apart by fearful chasms. It was cold and yet everything was burned as if a blast of fire had passed over the island. The trees had no more foliage or branches; they were reduced to toasted trunks. With my foot I hit something; I lowered myself and saw a charred goat. One could see that it was a goat, because on the flesh you could see tufts of hair; its head was crushed, as if it had been beaten with a hammer. The stone houses were piles of rubble. Only the reinforced concrete turrets had survived. A few dying goats whispered desperately; it seemed like a man’s lament.“Immediately below is a note from Italy’s Central State Archives:29 October 1944 memo for Luigi Romersa to meet with Mussolini [Archivo Centrale dello Stato Rom, SPD CO RSI B 65, Akte 5680]Lieutenant Romersa called to report that he has returned from his trip to Germany and to ask to be received by the DUCE, possibly within the day. 29 Oct. 1944.Luigi Romersa, l’italiano che vide l’atomica nazista e l’intervista che non fece in tempo a concedere | INFORMAZIONE CONSAPEVOLETable of Primary Sources for the Probable German Nuclear Weapon Test at Rugen Island in October, 1944. From Dr. Todd Rider’s Book, Forgotten Creators, pg. 3187.In his postwar memoir of the Manhattan Project, General Groves evidently disclosed his wartime knowledge of greater than acknowledged progress in the WWII German nuclear weapons effort. From pg. 3072 of Forgotten Creators:Leslie R. Groves. 1962. Now It Can Be Told: The Story of the Manhattan Project. pp. 147–148. “Another incident that concerned us greatly was the appearance in a national magazine of an article hinting at the theory of implosion. While it did not violate any rules, it was most disturbing. A thorough investigation indicated that it resulted from the work of an alert and inquisitive reporter in another country.”[Dr. Rider: “Clippings in a file at the Franklin Delano Roosevelt Library in Hyde Park, New York [Small Collections, Box 1, Folder 3, ATOMIC BOMB FILE] specifically link this comment from Leslie Groves to the 27 November 1944 article in Time. As Groves wrote, it would be quite concerning that any discussion of the implosion bomb design appeared in public at that time. What presumably concerned him even more, although he did not mention that in his book, is that the Time article said the implosion bomb design details came from the German nuclear program, not the U.S. nuclear program. This evidence strongly supports the conclusion that Germany indeed had an advanced program developing nuclear weapons, and moreover that Leslie Groves knew the German nuclear program was much more advanced than he ever admitted in public”.]Russian archives also contain a record of WWII German nuclear weapons testing, in this case, a pair of detonations in early March, 1945 near Ohrdurf, in the German state of Thuringia. According to Romersa, the bomb tested five months previous at Rugen Island came in two versions, one of which weighed about 20,000 pounds, the other, 30,000. If this is accurate (and he said this information was given to him personally by Joseph Goebbels), it would have made the German bombs 2 to 4 times as heavy as the first devices produced by the Manhattan Project. WWII Germany did not possess any means of delivering a bomb or warhead of that weight on enemy targets other than by submarine or, perhaps, a Messerschmitt Gigant transport plane. Neither of these would have been likely to succeed in penetrating Allied defenses, particularly those of any major city such as London. Therefore the latter tests appear to have been either 1) the result of a frantic effort to miniaturize the earlier bombs so they could be fitted as warheads to the V-2 IRBM, or 2) produced by a separate branch of the overall German nuclear effort, of which there were at least five (Reichspost-von Ardenne, German Army Weapons Bureau (heereswaffenamt), the Kaiser Wilhelm Institute, the kriegsmarine, and various SS technical labs located primarily in Austria).Below is the English text of a 15 November 1944 "Eyes Only" Red Army intelligence report which states that a weapon of “large destructive power” would be tested in the near future in Thuringia, a German state in which the Ohrdurf concentration camp was located during WWII.General Ivan Ilyichev. 15 November 1944. Intelligence report to General Antonov and Joseph Stalin. Archive of the President of the Russian Federation, 93-81 (45) 37.Peoples’ Commissariat of Defense of the USSRChief Intelligence Department of the Red Army15 November 1944 MoscowTo the Head of the Red Army General HQ General of the Army, Comrade AntonovReport:Our trustworthy source in Germany reports: “The Germans are preparing to conduct tests of a new secret weapon, which has a large destructive power. The test explosion of a bomb of unusual construction is being prepared under highest secrecy in Thuringia. For the preparations of the tests the local residents are supposed to be transported away by an SS detail; the whole operation is reported to be undertaken in strictest secrecy. The explosions are supposed to take place in a wooded area. For that, special roads to the presumptive test site are being created. The bomb to be tested has a diameter of one and a half meters. It consists of several hollow spheres that nest inside each other. It will be brought to the explosion place with a transporter specially constructed for it. It is still unclear when the test is supposed to take place, but the preparations are going at the maximum fastest pace.CONCLUSION. In the last months our source has reported more and more often about the feverish efforts of the Germans to test ever more powerful weapons and their means of delivery. Probably these experiments lead directly to an attempt of the Germans to actually carry out tests of atom bombs, about whose existence we have only incomplete, scanty information.”Head of Chief Intelligence Department of the Red Army Lieutenant General IlyichevTyped 4 copiesCopy Nr. 1 — Comrade Stalin Nr. 2 — Comrade Molotov Nr. 3 — Comrade Antonov Nr. 4 — into archiveThe document above was followed some four months later (in March, 1945) by the following report, also classified as “Eyes Only” intelligence. As with the preceding summary, just four (4) copies were made, one of which went to Stalin himself.General Ivan Ilyichev. 23 March 1945. Intelligence report to General Antonov and Joseph Stalin. Archive of the President of the Russian Federation, 93-81 (45) 37.Peoples’ Commissariat of Defense of the USSRChief Intelligence Department of the Red Army[2]3 March 1945MoscowTo the Head of the Red Army General HQGeneral of the Army, Comrade AntonovReport:Our trustworthy source from Germany reports:“The Germans have in recent times carried out two large-capacity bomb explosions in Thuringia. The explosions took place in a forest area, under conditions of strictest secrecy. Trees fell at a distance of 500–600 meters from the center of the explosion. Buildings and fortifications specially constructed for the tests have been destroyed.Prisoners of war who were near the epicenter of the explosion died, often without leaving a trace. Prisoners of war who were in the area beyond the center of the explosion have burns on their face and body, the strength of which depends on their position in relation to the epicenter of the explosion. The tests were carried out in a remote deserted area. The regime of secrecy at the test site was at maximum level. Entrance and exit from the territory are by special pass only. SS soldiers have surrounded the area of tests and interrogated any person approaching the area.The bomb, supposedly filled with uranium 235 and weighing approximately two tons, was brought to the test site on a specially constructed truck. Dewars of liquid oxygen were delivered together with it. The bomb was permanently guarded by 20 guards with dogs. The bomb explosion was accompanied by a large explosive wave and high temperature. In addition, a massive radioactive effect was observed. The bomb is a sphere with a diameter of 130 cm.The bomb consists of:1. High-voltage discharge tube, which is charged by special generators2. A sphere made of metal uranium 2353. A delay mechanism4. Protective casing5. Explosive substance6. Detonating mechanism7. Steel casingAll parts of the bomb fit inside each other.Initiator or bomb fuse.Consists of a special tube, which creates fast neutrons. It is charged by special generators, which create high voltage inside the tube. As a result, fast neutrons attack active material.Active bomb material.Active bomb material is uranium 235. It represents a sphere with an opening into which an initiator is inserted. Once this is done, the opening is sealed by a cork made of uranium 235.Protective casing.The uranium sphere is encased in a protective aluminum casing, which is covered by a layer of cadmium. This significantly slows down thermal neutrons emanating from uranium 235, which can cause premature detonation.Explosive matter.After the layer of cadmium it is placed inside explosives that consist of porous TNT saturated with liquid oxygen; TNT is made up of bars of a specially chosen shape. The inner surface of the bars has a spherical curvature, which is the same as that of the external surface of the cadmium layer. Each of the bars is supplied with one detonator or two electrical fuses.Casing.TNT is covered by a protective layer made of a light aluminum alloy. A blasting mechanism is attached on top of this casing.Exterior casing.An exterior casing of armored steel is installed above the blasting mechanism.Fairing.A fairing made of a light alloy can be installed on top of the armored casing for future installation on a rocket of the V-type.Bomb assembly.The sphere, which consists of metal uranium, is placed inside a protective casing, which consists of aluminum, covered in a layer of cadmium, so that the opening in the sphere coinciding with the opening is sealed off by a uranium cork. After this the aluminum sphere, covered in cadmium, is sealed off by a cork, on top of which the last bar of TNT is placed. Next, liquid oxygen is pumped through the opening inside a protective casing, which covers the TNT. After this the bomb is ready for deployment.Bomb ignition.The bomb ignition is carried out with the help of a high-voltage discharge tube. It forms a flow of neutrons, which attack the active material. When the flow of neutrons impacts upon uranium, element 93 fissions, which speeds up the creation of a chain reaction Next, the detonating mechanism detonates the explosive matter, after which a shock from the explosion of the external layer of TNT mixed with liquid oxygen takes place, which is directed toward the center. This allows the uranium to reach a critical mass.Ahead of this, before the explosion, the uranium sphere is irradiated with gamma-rays, the energy of which does not exceed 6 million electron volts, which many times increases its explosive qualities.CONCLUSION.Without doubt, the Germans are carrying out tests of a bomb of high destructive force. In the event of their successful conclusion and production of such bombs in sufficient quantities, they will have weapons capable of slowing down our advance.Head of Chief Intelligence Department of the Red ArmyLieutenant General IlyichevTyped 4 copiesCopy Nr. 1 — Comrade Stalin” Nr. 2 — Comrade Molotov” Nr. 3 — Comrade Antonov” Nr. 4 — into archive16 pp.The Chart Below is a Side by Side Comparison of the Manhattan Project “Fat Man” Plutonium Implosion Fission Bomb With the German Army Weapons Bureau Uranium-235 Boosted Fission Implosion Bomb.General Ivan Ilyichev Was the Head of the Main Intelligence Directive of the Soviet Union (the GRU) During WWII.Ivan Ilyichev - WikipediaKurt Diebner was heavily involved in the Ohrdurf tests and may even have been the designer of the bombs which were detonated there. He was easily the single most qualified nuclear weapons physicist in Germany during WWII and quite possibly the best man on the planet in this regard. Dr. Rider summarizes:"Publicly, after the war Samuel Goudsmit of the U.S. Alsos Mission and Leslie Groves of the Manhattan Project denigrated Kurt Diebner as being far inferior to Heisenberg in scientific talent, and in fact as being mainly an administrator and not a scientist. Privately they found (a) document that proved that Diebner had been given a formal award by Walther Gerlach (an impeccable physicist, and presumably a good judge of physics) for doing extensive scientific research, and for achieving much better results than Werner Heisenberg. Markings on the document show that U.S. officials responded to this document by classifying it Top Secret and burying it in their files.Leslie Groves even wrote a secret 1946 memo stating that Diebner “has a pretty good grasp of the German project” and explicitly recognizing that he was among the handful of “those German scientists of outstanding ability in the field of nuclear physics and chemistry who, by their past reputation and present knowledge, would be of more value to the national interest of this country if they could be employed here rather than in any other country. [...I]t is extremely important that these persons be prevented from giving their services to a potential enemy of the United States”.In 1939, Kurt Diebner may well have been the only person on Earth whose scientific expertise included: 1. TNT implosion bomb designs (“hollow-charge explosives”). 2. Fission chain reactions (proposals for uranium reactors and bombs). 3. High-energy-induced fusion reactions (“high-voltage particle accelerator for atomic transformations”). Those are the three major elements of the German nuclear device that was apparently tested by March 1945, or of modern nuclear bombs. Likewise, Diebner occupied leadership roles that included the Army (Heereswaffenamt), Kaiser Wilhelm Institute for Physics, Reich Research Council (Reichsforschungsrat), and the SS (when the SS controlled most research in the later stages of the war, if not earlier), and that spanned the entire German nuclear program from its very first meetings in 1939 in Berlin to the last days of the war in May 1945 in Thuringia. Thus Diebner was one of the most important people in the German nuclear program, and possibly even the single most important person. However, the false public depictions of Diebner’s abilities by Samuel Goudsmit and Leslie Groves after the war were highly effective, and most historical books and documentaries for the last 75 years have unquestioningly followed their lead in treating Diebner as a minor, peripheral official or even a scientific loser."Nor was this everything where Diebner is concerned. From the English language Wikipedia article “Kurt Diebner”:“The following reports were published in Kernphysikalisch Forschungsberichte (Research Reports in Nuclear Physics), an internal publication of the German Uranverein. The reports were classified Top Secret, they had very limited distribution, and the authors were not allowed to keep copies. The reports were confiscated under the Allied Operation ALSOS and sent to the United States Atomic Energy Commission for evaluation. In 1971, the reports were declassified and returned to Germany. The reports are available at the Karlsruhe Nuclear Research Center and the American Institute of Physics. (The German term Uranverein, loosely translated, means “uranium club” and as used in this article is a generic reference to the wartime work of the Kaiser Wilhelm Institute. However this is not entirely accurate, as many G Papers originated with the heereswaffenamt, the German Army Weapons Bureau—WP).F. Berkei, W. Borrmann, W. Czulius, Kurt Diebner, Georg Hartwig, K. H. Hocker, W. Herrmann, H. Pose, and Ernst Rexer. Bericht über einen Würfelversuch mit Uranoxyd und Paraffin G-125 (dated before 26 November 1942). In English: “Report of a cube test with uranium oxide and paraffin”. Likely an early test of uranium oxide cubes for potential use in a reactor.Kurt Diebner, Werner Czulius, W. Herrmann, Georg Hartwig, F. Berkei and E. Kamin. Über die Neutronenvermehrung einer Anordnung aus Uranwürfeln und schwerem Wasser G III, G-210. In English: “About the neutron propagation of an array of uranium cubes and heavy water”—this was obviously a cube lattice reactor test. The citation “G III” may be a reference to the third known attempt by Diebner to build a working “pile” (reactor) for the German Army Weapons Bureau.Kurt Diebner, Georg Hartwig, W. Herrmann, H. Westmeyer, Werner Czulius, F. Berkei, and Karl-Heinz Höcker. Vorläufige Mitteilung über einen Versuch mit Uranwüfeln und schwerem Eis als Bremssubstanz G-211 (April 1943). In English: “Preliminary notification of an experiment with uranium bulges and heavy ice as brake substance”, presumably another reactor experiment, in this case with frozen heavy water (“heavy ice”) as the moderator.Kurt Diebner, Georg Hartwig, W. Herrmann, H. Westmeyer, Werner Czulius, F. Gerkei, and Karl-Heinz Höcker Bericht über einen Versuch mit Würfeln aus Uran-Metall und schwerem Eis G-212 (July 1943). In English: “Report of an experiment with cubes of uranium metal and heavy ice”.”Kurt Diebner - WikipediaKurt DiebnerAre you getting the picture? The so-called “conventional history” of the end of WWII in Europe and of the invention and development of nuclear weapons is the direct result of either 1) American and Allied scientific and investigative incompetence or, much more likely, 2) a US military psychological operation which was carried out with British and German help. The “history that everyone knows” is not true and only partially factual. After reading the evidence I have shared here (and it is the merest scratching of the surface in Dr. Rider’s immense and extremely thorough tome), now go back and read the transcripts of the Farm Hall recordings. The Germans knew they were being taped, they clearly arranged their story ahead of time, and they stuck to it. Is it just me or do most of them seem to announce every five minutes that they “never tried” to build a bomb?Still not convinced? Did you know that the original recordings of the German scientists were inexplicably (?) taped over, and that they also amounted to a small percentage of all that was said by the Germans while they were under house arrest at Farm Hall? Nor were a large number of very prominent top minds ever captured or even thoroughly interrogated by the Allies at all, or if they were, the records of this have yet to surface or be pulled from various archives. To give just one name, where was Erich Schumann?Erich Schumann Was the Head of the German Army Weapons Bureau (the “heereswaffenamt”) and its Nuclear Weapons Black Project During WWII. He Was Also Heavily Involved in the Army’s Bioweapons Program.He was the head of the HWA during the war and thus Diebner's direct superior; in addition, he was the co-designer of at least one WWII boosted fission bomb schematic (the Schumann-Trinks device among other concepts), he personally performed some of the most important pioneering calculations in hydrogen bomb theory, he was deeply involved in German bioweapons R&D and a forceful advocate for their use against the United States, and was also Werner von Braun's PhD supervisor. This easily made him, or should have made him, a target for Allied intelligence that was at least as prominent as the other men who were captured, brought to England, and put under house arrest for months. But he was nowhere to be found at Farm Hall, nor anywhere in postwar occupied Germany other than, as far as I can tell, his own home. If anyone reading this has a reasonable explanation for the apparent exclusion of this great scientist from Allied internment and questioning, I am all ears. And he was just one among dozens and probably more like hundreds.The Germans had the bomb first. They were far ahead of the Allies both in theory and in terms of the sophistication and efficiency of most of the applicable machinery. What happened was the only kind of perfect storm that could possibly have prevented the Nazis from completing their weapons in numbers and winning, at minimum, the war in Europe---after which the best case scenario would have been a Cold War between the US and "Germania", but only if the Manhattan Project's new weapons would have been ready in time to prevent a nuclear first strike by the Germans against the continental US. This was no sure thing because according to Dr. Rider, the SS was working on full blown hydrogen bomb designs at various laboratories in southern Germany, Czechoslovakia, and Austria. The resulting weapon would have been ready for testing by 1946, and meanwhile the A-9/A-10 ICBM was under development at Peenemunde.Fortunately for humanity, a combination of factors prevented this nightmare scenario from occurring. These included: 1) the overall "conventional" Allied war effort, which was obviously overwhelmingly powerful thanks largely to the manufacturing capacity of the US 2) the extreme damage done to German industrial and warmaking capacity and logistics by the combined US-UK strategic bombing campaign, 3) the war of attrition, particularly on the Eastern Front, which ground the Wehrmacht down, 4) the Allied Doomsday weapon, 5 million "cakes" laced with anthrax produced as part of Operation Vegetarian and stockpiled in England and which served to deter a potential German nuclear strike, and, not least, 5) the war in the shadows, which certainly included an unknown number of Germans who chose to obey God and their conscience rather than Hitler and the Nazis, and whose determined resistance and espionage certainly helped to cripple or at least significantly impede the German war effort. There were also significant numbers of brave resistance fighters in the conquered territories who engaged in desperate sabotage missions that targeted existing or embryonic German nuclear weapons and related technology. Many of these paid for their actions with their lives, and their names now are known only to God.In addition, at least some of the most prominent scientists and military personnel in the Third Reich, whether Nazis or otherwise, unquestionably chose to trade emergent German nuclear weapons, materiel, and related developments for their lives rather than attempt a last gasp atomic attack, which even in the face of the previously mentioned factors may have been ready to go in the closing weeks of the war. These certainly included Hans Kammler, probably also Werner von Braun and his sidekick General Dornberger, and a number of others who went along for the ride and ended up with comfortable lives in postwar America (at NASA and elsewhere) and to a lesser degree, in England and the Soviet Union.The end result was that the Germans---for all of the formidable scientific and industrial prowess described above---stalled at the prototype phase or just past it, and were overrun in the barest nick of time by the British and Americans from the west and the Soviets from the east.This is the true history of WWII in Europe.For Further Reading:Revolutionary Innovation | RIDER Institute | Forgotten Creators.The Hidden NaziHans Kammler, Hitler’s Last Hope, in American HandsThe Mystery of the missing Nazi GeneralNew light on Hitler's bomb – Physics WorldAuthor fuels row over Hitler's bombThierry Etienne Joseph Rotty's answer to How close was Germany to making an atomic bomb?William Pellas's answer to How close did Nazi Germany come to creating an operational nuclear weapon during WWII? Would they have been able to use it on their V2 rockets?William Pellas's answer to Did the Nazis really detonate a nuclear bomb before the US? Or is this just a conspiracy theory?William Pellas's answer to How much conventional explosives would it take to make a fusion bomb without any nuclear fission stage?William Pellas's answer to Even if the Germans acquired the atomic bomb first, how were they going to get it to North America successfully?https://historum.com/threads/german-atom-splitting-bomb-referred-to-in-ww2-japanese-diplomatic-signal-from-stockholm-embassy-to-tokyo-nara-archives-rg457.183962/