'Graf Spee' rises into a diplomatic storm

Gingerly, and with the utmost delicacy, bits from the Graf Spee - the German pocket battleship whose captain was fooled by the Royal Navy and British diplomats into scuttling her in Uruguayan waters in December 1939 - are being salvaged in the shallow waters of the River Plate.

The divers, blinded by muddy waters off the Uruguayan capital, Montevideo, who in February recovered the ship's emblem, a 350kg bronze eagle grasping a Third Reich swastika, are continuing work this month as carefully as they can. But the real refinement is going into the intricate diplomatic minuet which surrounds the salvage operation. When the emblem was first shown, the swastika was carefully masked.

No government official in Uruguay, and certainly none in Germany, wants to be saddled with the reputation of restoring an icon of Hitler's navy in a part of the world where the Führer had no little popularity, some of which still survives. At the same time the salvage company wants to get a return on the money it has spent, and the authorities in Montevideo see relics from the 16,000-ton vessel as the focus of a bright new attraction in a small country which relies on the cash spent by tourists from its giant neighbours Brazil and Argentina.

Uruguay's centre-left government says the relics from the vessel should be sold off to the highest bidder by a reputable auctioneer. Uruguayan parliamentarians are demanding that the wreck be definitively declared a piece of national heritage. For its part, Chancellor Angela Merkel's government has gently requested the Uruguayans not to sell pieces off or allow them to go abroad. She certainly doesn't want them back in the German Federal Republic.

But whose is the wreck? The Germans claim it is still theirs. But some say that a British agent bought it from the German government as scrap for £20,000 in 1940. The Uruguayan government says it is now theirs as no one officially claimed it. "The surviving members of the crew and the Jewish lobby do not want the wreck touched," says Joseph Gilbey, author of two books on the vessel.

Alfredo Etchegaray, the Uruguayan businessman who is leading the salvage effort, says he and his partners have spent some $7m (£3.7m) so far. In 2004, working with survivors of the warship, he brought up the 27-ton rangefinder. He says he needs a total of $30m if the whole vessel is to be raised.

Hector Bado, Mr Etchegaray's leading diver, says if the government does not want the bronze eagle to leave Uruguay it should buy it from those who found it: "We've got it up for sale."

The sinking of the Graf Spee commanded by Captain Hans Langsdorff, was the Royal Navy's first big victory in the Second World War. The German battleship had sunk nine ships in the South Atlantic and Indian Ocean within a few months of the outbreak of war, not without sustaining some damage herself.

Off the River Plate, where he was hoping for easy new kills, Langsdorff was being shadowed by Commodore Henry Harwood, commanding a task force of the heavy cruiser Exeter and the light cruiser Ajax, backed up by Achilles of the Royal New Zealand Navy. The German forced Exeter to retire but then lost his nerve, and ran for temporary shelter and to bury his dead in the Uruguayan capital, where he was taken in by false reports circulated by British diplomats that an armada awaited him if he put to sea again. The British persuaded the Uruguayan government that, under international law, Langsdorff could not be sheltered indefinitely.

Conscious that he could not make it back to Germany, he put ashore most of his crew. In front of 250,000 people watching on the Montevideo seafront, he sailed out of Uruguayan waters just after 6pm on Sunday 17 December, two hours before his vessel faced internment by Uruguay.

Using explosives he scuttled Graf Spee three miles out. After burning for three days at anchor, she settled in 25 feet of water, her stern blown off and the 300-ton aft turret lying in the mud nearby. Many Germans survived the disaster and were taken to Argentina, but Langsdorff shot himself two days later in Buenos Aires.