Foreign Relations of the United States, Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 E.A.C./4–545: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

London, April 5, 1945—8 p.m.
[Received 8:50 p.m.]

3477. Cornea 208. As reported in my 3450, April 4, midnight, the Soviet representative on the European Advisory Commission at last night’s meeting proposed including a “reparation and deliveries division” in the control machinery for Austria. In accordance with Department’s 2007, March 15, midnight, I objected strongly, urging that inclusion of a reparation division, by underlining the idea of Austrian reparation would greatly discourage the effort of Austria to rebuild its economic independence, which would in any case be precarious initially. I stated that my Government while insisting on Austria’s obligation to make restitution of identifiable looted property located in Austria, did not approve in principle imposition of a reparation burden on Austria. I proposed that restitution be handled as a function of the economic division.

Strang also questioned Austria’s ability to pay reparation and at the same time to rebuild a stable economic life and asked whether the question of Austrian reparation fell within the sphere of the Moscow Compensation Commission.⁸ He suggested tentatively a “restitution and deliveries division” with later possible insertion of “reparation” if the Moscow Commission decided that Austria should pay reparation.

Gousev then raised two questions on which he requested early expression of views by members of the EAC.

(1) Should the question of Austrian reparation be discussed in the EAC or in some other body?

(2) What should be done with the German industries in Austria, particularly those which have been established or expanded since 1938, and what should be done with other property belonging to the German state or to German citizens and located in Austria?

Referring to great expansion of German industry in Austria, Gousev stated that it was understood at Yalta that the Compensation Commission would take into account German investments in other countries in calculating reparation,⁹ and that the United States delegation at Yalta had advanced certain estimates concerning German investments located in the United States and other American countries and potentially available as compensation.

In conclusion, Gousev stated what [that?] his Government had no doubt whatever but that in principle Austria must pay reparation for her contribution to the German war effort and for failure to assist the Allies in securing her liberation. He stated that this question of principle must be decided in the European Advisory Commission, but that the calculation of volume and categories of Austrian reparation was a function of the Compensation Commission in Moscow.

In a short private talk I tried to discover whether Gousev envisaged immediate transfers of machinery from stocks existing in Austria or a program of recurrent reparation out of new production. Apparently he has both programs in mind.

I must point out to the Department that it will be impossible for the EAC to conclude an agreement on control machinery for, Austria until it has settled the question of including a reparation division. If conclusion of the control machinery agreement, already long postponed, and of the interim arrangements for a shared Allied control in the period between the occupation of Vienna and German surrender or collapse, is long delayed, the Soviet forces will be able to overrun most of the industrial areas of Austria and to carry out a unilateral program of removing machinery as “booty of war” or as interim reparation deliveries. Unyielding insistence on our, present position may result in reparation being exacted in hasty and careless manner by the Soviet authorities, who are now on notice regarding our opposition to Austrian reparation.

As I see it, we now have a Hobson’s choice between maintaining our opposition on principle or accepting in principle the obligation of Austria to provide such reparation as may be determined by the four powers only not by one of them acting alone. If we should choose the second course actual determination of Austrian reparation would presumably be made by the Three Power Compensation Commission in Moscow and carried out under the Allied occupation authorities in Austria. In discussing any program of Austrian reparation, we might give first attention to the removal of excess machinery found in Austria, beyond the needs of a peaceful Austrian economy.

An immediate decision in principle on this question is necessary if we wish to expedite the conclusion of a control machinery agreement for Austria and to facilitate early United States participation in the decisions which are daily being made in Soviet-occupied Austria.

Winant

8. For documentation regarding the Moscow Reparations Commission, see pp. 1169 ff.
9. See part V of the Protocol of Proceedings of the Crimea Conference, February 11, 1945, Conferences at Malta and Yalta, p. 978, or A Decade of American Foreign Policy, 1941–49, p. 32.