At the Potsdam Conference, the new German boundaries broadly agreed on at Yalta earlier that year had been finalized. Poland was awarded much of Germany's eastern lands (all the way west into the German heartland to the Oder and Neisse Rivers), given to Poland as territorial compensation for the eastern lands of Poland seized during the Soviet invasion of Poland in 1939, which were now formally recognized by the Americans and British as being permanently annexed to the Soviet Union.  Additionally, much of old East Prussia (the heartland of the ancient German Teutonic or Prussian state) was divided in half, with the northern portion and its leading city of Königsberg given to Russia and the southern half to Poland. Also the German free city of Danzig was turned over to Poland.

Germany itself, or what was left of it, was divided first into three zones, one in the East placed under Soviet supervision, one in the Southwest under American supervision, and one in the Northwest under British supervision.  France wanted a zone in the West, bordering Germany, and Russia agreed to reworking the boundaries of the zones – as long as the French zone was drawn entirely from the British, and American zones. So it was that France also became an occupying power.

The Berlin capital city, which was located entirely within the Russian zone of occupation, was itself divided also into four sectors: Soviet, French, British, and American.  The Russians promised free access from the American, British, and French zones in the West through the Soviet zone to Berlin.  As events would soon prove however, that would leave Berlin – even the sections of the city under joint French, British, and American control – in a very vulnerable position.

Learning of these territorial transfers, masses of Germans living in East Prussia grew fearful of what would happen to them under their new Polish and Russian masters, and filled the roads as they fled west to what was left of Germany, even then trying to reach past the eastern or Russian sector (what would soon come to be called East Germany) in order to get to the West German (the American, French or British) sectors of a newly divided Germany.

Hunger and intense suffering (even death) from winter exposure became widespread among a huge German refugee population.  The Germans, however, expected little sympathy from the rest of Europe.  They were on their own to face their new fate as fallen Übermenschen.

A major issue facing the victorious Allies was what to do with the leaders of the former Fascist enemies.  To a great extent the Italian situation had resolved itself when in late April Mussolini was captured by Italian anti-Fascists (for the second time) and this time shot and then hung up (along with his mistress and a number of his close supporters) for display in a public square in Milan.

Hitler had also resolved the question of his fate when at the end of the month he and his long-time mistress, Eva Braun, committed suicide.  Also Himmler and Goebbels (and family) had taken the path of suicide. But twenty-four other leaders were arrested and turned over to a special court located at Nuremberg. After lengthy hearings begun in November of 1945, on October 1st, 1946, judgements were handed down: twelve were to be hanged (Air Marshall Goering had hanged himself in his cell just prior to the sentencing; Labor Front head Ley had done so several months earlier), seven were given lengthy prison terms (three for life) and three were acquitted.  With this, it seemed that the Allies were ready to move on with their work of reconstituting Germany.

Russia was given the go-ahead within its occupation zone in East Germany to strip the land of any and all German industrial equipment it needed in order to rebuild its own war-torn industrial infrastructure.  At first Russia was rapid in the dismantling of German industry, although the Soviets eventually slowed down the process when it became apparent that ruining the German economy would leave Russia facing a huge social crisis in Russian-occupied Germany, a crisis that Russia was not ready to handle.

Meanwhile in their zones, the British, French, and Americans also undertook to dismantle the German armaments plants, but also slowed up the process when they discovered the same problems the Russians had encountered. Indeed, in the French zone, gradually farming, coal mining, and steel manufacture were encouraged by the French administration, since much of the production and profits were directed toward France.

As far as the rest of enemy Europe was concerned (most all of it except Italy under occupation by the Russian Red Army), the design of the futures of Italy, Austria, Rumania (soon to be termed Romania), Bulgaria, Hungary and Finland was turned over to a special Council of the Foreign Ministers of the Big Five.  When the Foreign Ministers finally gathered in Paris (July-October 1946) they found the going slow in their attempts to find agreement in the handling of these former enemy nations. Russia wanted the Italian colony of Libya (giving Russia finally a position on the Mediterranean), but America and Britain would not back down in their refusal. Russia also wanted a huge reparations payment ($300 million) from Italy. But that too was blocked by the Western allies.  However the final treaties did provide for extensive land transfers and large reparation payments to the Allies (Russia, Yugoslavia, Czechoslovakia, and Greece principally) and a huge reduction in the size of their former enemies' armed forces.  Finland, which had been attacked by Russia – and consequently found Germany to be its only practical ally – now had to pay Russia $300 million for damages and surrender territory to the Russians. And in the end the Italians were required to pay Russia $100 million, Yugoslavia $125 million, Greece $105 million, and were forced to give up all their colonies. The city of Trieste, once the most important port city of Habsburg Austria's empire, and its rich hinterland (inhabited by both Italians and Slavs), found itself caught between Italy and Yugoslavia in its post-war assignment.  It was finally decided to place Trieste under United Nations administration.¹

¹In 1954 the Trieste province would be divided in half with the western portion, including the city of Trieste itself, assigned to Italy and the eastern and southern portion assigned to Yugoslavia (eventually to Slovenia and a smaller section to Croatia).