863.51 Relief Credits/115: Telegram
The Ambassador in France (Herrick) to the Secretary of State
[Received May 28—1:45 p.m.]
137. Reparation 93. At resumption Commission meeting this morning:
1. Italian delegation blocked any action on Austrian application that certain revenues be excepted from first charge under article 197 in favor of contemplated loan (see first paragraph my Reparation 89, May 21). Their reasons for refusing to grant Austrian application purport to be:
- (a)
- That Reparation Commission decision of January 14 last consenting in principle to the proposed loan was taken on understanding that a certain program of productive works was to be carried out. It now appears this program has been partly abandoned or modified (referring to change in plans for electrification railways). In view of this the Italians hold the Reparation Commission is released from its earlier decision.
- (b)
- In general that Austrian economic situation is improving and does not call for such measures as are contemplated by the loan. In consequence Italians moved to refer whole question to the allied governments for consideration.
British delegation insisted vigorously that Commission is bound by terms of its earlier decision; that on strength of that decision negotiations have been undertaken with the bankers; that the Commission’s [Page 908] good faith is in question; that a volte face by the Commission would injure Austria’s credit by seeming to imply that the menace of reparations would again be held over her; that the considerations involved by the Italians were before the Commission when it took its January 14 decision; that the only possible new consideration to arise since that date has been the change in program for productive works; but that in any case the Commission’s decision in January was not conditioned upon its approval of any specific program of expenditures. To meet Italian view, British, with support of French and common delegations, proposed that Commission request exact information from Austria as to contemplated program for works and consider question in the light of such information, without, however, in any way going back on its January decision.
Italians refused this and, in order to block vote on the British motion, raised the question of the Commission’s competence to grant exceptions to the general reparation charge under article 197, maintaining that this could be done only after authority had been given by the powers who are alone competent under article 200.54 The Italians therefore raised the question of interpretation of these articles which fall within part nine of the Treaty and concerning which the Commission has no power of interpretation. They also announced their intention in case the Reparation Commission should eventually be called upon to act in application of article 197 to raise the question that its decision in such case must be by unanimous vote and to provoke an arbitration on this point if necessary under paragraph 13, annex 2, part 8 of the treaty.55
It was finally decided to postpone further consideration of the question until the next meeting of the Commission set for June 23.
[Paraphrase.] At the Austrian Section meetings, May 23 and 24, it became apparent that the Italian delegates intended blocking the loan by every means possible. Their reasons for release of the Commission from its previous decision strike me as being merely a pretext. There are evidently other reasons back of the attitude they now maintain. [End paraphrase.]
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4. Paragraph 1 of the foregoing mailed to Legation at Vienna for its strictly confidential information.